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Creating a Non-taxable Rent Deduction Custom Pay Type

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

Updated: October 2024

Your employee is renting a room from you at $80 per week.

Info - Blue Block (1)

 Remember: If you are also providing housing or an accommodation allowance as part of their package, your employee still needs to pay tax on the value of this allowance as this is a benefit.
Follow this link to find out how to add this to their timesheet.

Let's break down this Rent example.

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
 ✅ Rent amount entered on timesheet as applicable

Here is an example setup:

S3CPT_RentDeduction

  • 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 rent amount on the agreed day.
  • The timesheet summary displays all non-taxable deductions together as one combined figure.
    • In this example, Aroha has two deductions from her Net pay: MOJ fine of $50 and her rent of $80 = deduction of $130 from her Net gives you the take-home pay of $358.40

Info - Blue Block (1)Reminder: Deductions set up with Custom Pay Types are not transferred to Thankyou Payroll and remain in your account to manage. They are excluded from the 'You deposit' amount.

Did You Know - Green Block (1)

 

We have a video that can help!

Follow this link to our video on creating a Non-Taxable Employee-Requested Deduction to see a similar Custom Pay Type setup.

Further Resources