iMac SPDIF configuration advice - help!

Hi,

I have a mid 2010 iMac and am trying to record into Garageband using the SPDIF input and just cannot figure out which part I havent got right.

I am taking a digital signal from a Fractal Audio Axe FX Ultra on an RCA Coaxial jack, into an optical convertor, the toslink then goes to the mini toslink connector on the input jack of the iMac - all good - the optical cable is lit at the end, so I know it's live.

I can see from the hardware config that the Digital Optical Audio Input and Output are present (and I even plugged the cable into the output to check it would light - it did).

BUT

Where oh where do i make any form of selection for the input to be SPDIF - all the iMac lets me select from System Preference is the Internal Microphone or Line in - no SPDIF. If its not selected or configured here, where is it selected?

Are there settings I need to adjust like the clock rate (I know the Fractal is fixed at 48Khz). If yes, where are they located?

Any help would be much appreciated, it doesnt seem to make sense why it doesnt work, but I know that if the Mac has no option for me to select SPDIF input then its not going to be available in Garageband either...