---
title: Creating a Taxable Allowance Custom Pay Type for Housing and Accommodation
description: This example shows one possible set up of a custom pay type for housing you provide or an accommodation allowance.
---

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# Creating a Taxable Allowance Custom Pay Type for Housing and Accommodation

## This example shows one possible set up of a custom pay type for housing you provide or an accommodation allowance.

*Updated: October 2024*

You provide accommodation as part of employment (usually due to location). The full value of that accommodation is taxable, so $250.00 per week.   
\*[If your employee pays you rent, follow this link to the rent deduction article](https://help.thankyoupayroll.co.nz/en/custom-pay-type-nt-rent-deduction?hsLang=en).  
Let's break down this example.

**This allowance is**:

|  ❌  | A regular payment I can use [system pre-loaded pay types](https://help.thankyoupayroll.co.nz/en/discovering-pre-loaded-pay-types?hsLang=en) for. |
| --- | --- |
|  ✅ | I prefer using a custom pay type for clarity on the payslip or/and reporting and tracking purposes. |
|  ✅  | This is a before-tax allowance, meaning taxed as part of the employee's gross wages.  |

**The custom pay type & timesheet should have the following**:

|  ✅  | Custom pay type created in the **taxable** section |
| --- | --- |
|  ✅ | **Rate**: 1 \| **Per**: unit |
|  ✅ | Allowance amount or value of housing entered on timesheet |
|  ✅ | This is income and taxed as part of gross wages. |

**Here is an example setup:**

> ![S3CPT\_AccommodationAllowance](https://help.thankyoupayroll.co.nz/hs-fs/hubfs/KnowledgeBase/screensteps/Employee%20Settings/ExampleScenarios/S3CPT_AccommodationAllowance.png?width=608&height=591&name=S3CPT_AccommodationAllowance.png)
> 
> - 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 amount of the allowance or the value of the housing in the timesheet. 
>     - Leave the 'Exclude from annual leave calculations' tick box **blank **as you enter the amount.
> 
> - The timesheet summary displays all taxable allowances together with the standard pay as one combined Gross figure.

| ![Did You Know - Green Block (1)](https://help.thankyoupayroll.co.nz/hs-fs/hubfs/KnowledgeBase/CalloutIcons/Did%20You%20Know%20-%20Green%20Block%20(1).png?width=52&height=52&name=Did%20You%20Know%20-%20Green%20Block%20(1).png)   | We have a video that can help! Follow this link to our [Back Pays custom pay type video](https://youtu.be/wnO1oQZRM84) to see a similar Custom Pay Type setup. |
| --- | --- |

---

### Further Resources

- [Information on accommodation allowances - IRD's website.](https://www.ird.govt.nz/employing-staff/paying-staff/allowances/accommodation-allowances)
- Need more information on [creating custom allowance pay types? Follow this link to our dedicated article](https://help.thankyoupayroll.co.nz/en/custom-allowance-pay-types?hsLang=en).

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