Examples of Custom Pay Types
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      Creating a Taxable KIT Hours Custom Pay Type

      This example shows how to set up a custom pay type to keep track of the max 64 keeping-in-touch hours allowed during government-paid parental leave.

      Updated: October 2024

      You have agreed to some KIT hours for your employee to attend meetings and major events during their parental leave. Let's break down this example.

      Info - Blue Block (1)

      KIT hours are limited to a maximum of 64 during the 26 weeks of government-paid parental leave. If this number is exceeded, it is considered a return to work, so keep a close eye on these hours. 

      *Run a Pay Type Summary Report to keep track of unit quantities for this employee's KIT Hour pay type.

      Let's break down this example.

      This allowance 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 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: Employee's usual rate  | Per: hour
       ✅ Hours entered on timesheet for tracking
       ✅ This is income and taxed as part of gross wages.

      Here is an example setup:

      CPT_KIT Hours (1)

      • 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.
        • Note that there will not be standard hours in the timesheet when the employee is on parental leave.
      • Enter the number of hours worked as KIT Hours in the timesheet.
        • This should be excluded from annual leave calculations (ticked box).
      • The timesheet summary displays all taxable allowances together with the standard pay as one combined Gross figure.
        • This KIT Hour payment is the only income for this timesheet period as the employee is on parental leave.
        • Note that KiwiSaver is deducted from this income, and the Employer Contribution and ESCT are also calculated.
      Info - Blue Block (1)

       

      		 There are additional KIT hours available with preterm baby payments. Go to the IRD's website to find out more.

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