Examples of Custom Pay Types
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      Creating a Non-taxable Deduction Custom Pay Type for Repaying a Loan

      This example shows one possible set up of a custom pay type for an after-tax loan repayment deduction.

      Updated: October 2024

      At your employee's written request, you have agreed to give them an advance on their wages to cover a rent bond. They have agreed to repay this at $100 a week from their future wages. Let's break down this employer-provided loan repayment example.

      Info - Blue Block (1)Depending on the type of loan and the interest charged, fringe benefit tax could apply. Check this IRD exception list and be sure to keep the correct records.

      This deduction is:

       ❌  A regular payment I can use system pre-loaded pay types for.
       ✅ I prefer using a custom pay type for clarity on the payslip or/and reporting and tracking purposes.
       ✅  This is a non-taxable deduction, meaning after income tax has been calculated. 

      The custom pay type & timesheet should have the following:

       ✅ Custom pay type created in the non-taxable section
       ✅ Rate: -1 (deduction rate is negative)| Per: unit
       ✅ Instalment amount entered on timesheet as applicable

      Here is an example setup:

      S13CPT_LoanRepaymentDeduction

      • Create this custom pay type with a recognisable name in the Employee Profile - Pay Types tab and SAVE.
      • Select your recognisable pay type from the dropdown timesheet list.
      • Enter the instalment amount on the agreed day.
      • The timesheet summary displays all non-taxable deductions together as one combined figure.

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