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Creating a Taxable Shift Allowance Custom Pay Type

This example shows one possible set up of a custom pay type for a taxable shift allowance.

Updated: October 2024

You provide a shift allowance of $50 per night shift to compensate for the inconvenience of working outside ordinary hours. 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 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 entered on timesheet as applicable
✅ This is income and taxed as part of gross wages.

Here is an example setup:

S5CPT_ShiftAllowance (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.
  • Enter the amount of the allowance on the applicable day/s.
    • Leave the 'Exclude from annual leave calculations' tick box blank as you enter the amounts
  • The timesheet summary displays all taxable allowances together with the standard pay as one combined Gross figure.
Did You Know - Green Block (1)

 

We have a video that can help!

Follow this link to our Back Pays custom pay type video to see a similar Custom Pay Type setup.

Further Resources