How to configure the child allowance earnings item? (AO)

The Child Allowance earnings item has a unit value multiplied by the number of eligible dependents. According to Article 23 of Presidential Decree No. 95/26, of May 22, there are minimum monthly amounts to be received per child, although employers may pay amounts above the minimum limits set out here:

• Kz 2,400.00 per child, for employees and pensioners with earnings or pensions up to five times the national minimum wage;

• Kz 1,500.00 per child, for employees and pensioners with earnings or pensions greater than five and less than or equal to 10 national minimum wages;

• Kz 900.00 per child, for insured persons and pensioners with earnings or pensions above 10 times the minimum wage.

The law refers to earnings. It did not use the term base earnings. This means the total gross earnings must be considered, i.e., the total amount of regular and periodic monetary payments, not just the base earnings. Excluded are:

• indemnity-type payments (per diem allowances, representation expenses);

• payments of a merely occasional or non-regular nature, since they are not part of the definition of earnings set out in the General Labor Law.

You must set the earnings item used to pay the Child Allowance with the type Unit value per dependent, and, in the Dependents' age range field, enter the ages between which dependents are considered eligible for this earnings item. This means it must be set between 0 and 18, since the right to the child allowance ends when the child turns 18 years old.

Using the Maximum no. of dependents field, you can set the number of dependents up to which the child allowance should be paid. The maximum limit set (Article 25, No. 3) corresponds to five dependents.

• In the employee's record, you must fill in the no. of dependents on the Household tab. You should take into account the dependent's/dependents' date of birth, so their age can be calculated and checked against the limits set in the earnings item.

• Enter the relationship as Descendant, so they are identified accordingly;

• Enable the household member to be considered in the calculation.

According to Article 2, No. 1 d) of the Labor Income Tax Code, the following is not subject to taxation: the child allowance, paid by the employer, in an amount that does not exceed the maximum limit of 5% of the employee's base monthly salary, excluding employees subject to the public sector compensation regime.

This means that child allowance amounts paid to employees subject to the public sector compensation regime are fully exempt, while amounts paid on this basis to private sector employees are only exempt up to the limit of 5% of their base monthly salary. So, for private sector employees, you must set the child allowance amount as partially exempt from IRT taxation on the child allowance earnings item, on the Deductions tab.

Regarding the IRT deduction, the Exemption Limits Configuration feature is available, which lets you calculate the child allowance amount (both exempt and not exempt from IRT taxation) for private sector employees. To access it, you should:

1. Go to Tables | Human Resources | Processing Data | Earnings Items;

2. On the Deductions tab, click the "…" option shown next to the Exemption Limit column;

3. Enter the formula @@VENC@@*0,05/N.º Dependentes so the exemption limit is calculated per dependent. This formula takes into account the number of active dependents in the employee's record (on the Household tab) who fall within the age range limits and the maximum number of dependents specified in the earnings item's configuration.

After making sure the previous settings are in place, you must add the child allowance earnings item on the Other Postings tab of the employee's record, and specify the amount to be paid per dependent.

During processing, the settings defined will be taken into account, and the amount associated with the earnings item will be multiplied by the number of active children whose age falls within what was set in the earnings item's configuration.