--- title: Paying a Bonus description: Add a bonus to your employee's timesheet using either a Custom Pay Type or as a Lump Sum Payment. This article shows you how to do both. --- [Skip to content](https://help.thankyoupayroll.co.nz/en/paying-a-bonus#main-content) English Show submenu for translations [More support](https://help.thankyoupayroll.co.nz/en/kb-tickets/new?hsLang=en) ![TYP\_Logo-09-1.png\]](https://help.thankyoupayroll.co.nz/hs-fs/hubfs/TYP_Logo-09-1.png?height=40&name=TYP_Logo-09-1.png) Open main navigation Close main navigation - English Show submenu for translations - [More support](https://help.thankyoupayroll.co.nz/en/kb-tickets/new) - [Visit our website www.thankyoupayroll.co.nz](https://www.thankyoupayroll.co.nz/) [Visit our website www.thankyoupayroll.co.nz](https://www.thankyoupayroll.co.nz/) Kia ora! How can we help you? - There are no suggestions because the search field is empty. 1. [Help Centre](https://help.thankyoupayroll.co.nz/en?hsLang=en) 2. [Processing Pays](https://help.thankyoupayroll.co.nz/en/processing-pays?hsLang=en) 3. [Special Pays](https://help.thankyoupayroll.co.nz/en/processing-pays?hsLang=en#special-pays) # Paying a Bonus ## You can add a bonus to your employee's timesheet using either a Custom Pay Type or as a Lump Sum Payment. *Updated: November 2026* When paying a bonus, whether discretionary or regular, remember to allow for any **KiwiSaver contributions** that will be added so that you are not paying more than you budgeted for. You can not exclude KiwiSaver employer contributions from a taxable payment.  ![Info - Blue Block (1)](https://help.thankyoupayroll.co.nz/hs-fs/hubfs/KnowledgeBase/CalloutIcons/Info%20-%20Blue%20Block%20(1).png?width=52&height=52&name=Info%20-%20Blue%20Block%20(1).png) \*Discretionary bonuses are **excluded from annual leave calculations when added to timesheets.** Discretionary bonuses are not expected, don't happen regularly nor are they included in employment contracts**.** \*If you are unsure whether your bonus is discretionary, [contact the IRD](https://www.ird.govt.nz/employing-staff/payday-filing/non-standard-filing-of-employment-information/lump-sum-payments)or [Employment New Zealand](https://www.employment.govt.nz/pay-and-hours/pay-and-wages/leave-and-holiday-pay/public-holiday-pay#scroll-to-1). #### In this article: - [Paying the Bonus as a Lump Sum](https://help.thankyoupayroll.co.nz/en/paying-a-bonus#Bonus_LumpSum) - [Paying the Bonus as a Custom Pay Type](https://help.thankyoupayroll.co.nz/en/paying-a-bonus#Bonus_CustomPay) --- ### Paying the Bonus as a Lump Sum Payment Lump sum payments are taxed as per the calculations set out by the IRD. The employee pays PAYE on this bonus.  You can either create a stand-alone timesheet with only the bonus payment or you can add this row to a regular timesheet. In this example, we will use the stand-alone timesheet option: > ![Bonus\_LumpSum\_Christmas](https://help.thankyoupayroll.co.nz/hs-fs/hubfs/KnowledgeBase/screensteps/ProcessingPays/Bonus_LumpSum_Christmas.png?width=670&height=461&name=Bonus_LumpSum_Christmas.png) > > 1. If you have completed the 'default entries for standard pay row' in the Employee Profile, the 'Standard Pay' row of the timesheet will be pre-populated. Delete the entry boxes from this row to make it into the Lump Sum Payment-only timesheet. > 1. If you want to include the Lump Sum in an active timesheet, simply add a row below the 'Standard Pay' row by clicking the right + add row button. > 2. Select the '**Lump sum'** pay type from the menu. > 3. Now enter the amount of the bonus to be paid to your employee in a single-entry lump sum. > 4. Below the timesheet you will see the option to '**exclude this entry from annual leave calculations**'.  > 1. If this is a discretionary bonus, click this option as in the example. > 2. If this is a regular bonus as part of your employee's contract do not click this option as this is not a discretionary bonus. > 5. **Update and Save** this timesheet. The **timesheet boxes will be green** when the timesheet has been saved, as in the example. > 6. To check that you have/have not selected to exclude this payment from annual leave calculations, simply **left-click in the entry field** and you will see the Costing screen with your option. --- ### Paying a Bonus as a Custom Pay Type Using a Custom Pay Type to pay your bonus gives you the option to personalise it. You can choose to call the bonus something special so that it will be easily recognisable on your employee's payslip. **Let's see how to set this up.** Custom Pay Types are created in the **Employee Profile**: > ![CustomPayType\_ChristmasBonus](https://help.thankyoupayroll.co.nz/hs-fs/hubfs/KnowledgeBase/screensteps/ProcessingPays/CustomPayType_ChristmasBonus.png?width=608&height=382&name=CustomPayType_ChristmasBonus.png) > > 1. In the Employee Profile, select the '**Pay Types**' Tab. This will bring you to the screen as shown in this example. > 2. To create a Custom Pay Type for a bonus, you have to set it up as a '**Normal pay type (taxed)**'. > 3. In the '**Name**' field, enter the wording you want to display on the employee's payslip. In this example, we use 'Christmas Bonus' as an example only. > 4. Set the '**Rate**' at which the bonus will be paid to **1** so that the actual amount can be entered in the timesheet. > 5. Set the '**Rate per' unit**. > 6. **Save** this setting. You have successfully added this pay type to your timesheet pay type menu. For more information on creating custom pay types, [follow this link to our article](https://help.thankyoupayroll.co.nz/en/creating-a-custom-pay-type-for-allowances/deductions?hsLang=en) with more examples of how custom pay types can be used. **How to add this to a timesheet:** > The process of adding this to a timesheet is the same as for adding the lump sum payment above. You will find the pay type at the top under Standard Pay. > > ![Bonus\_CustomPayType\_Christmas](https://help.thankyoupayroll.co.nz/hs-fs/hubfs/KnowledgeBase/screensteps/ProcessingPays/Bonus_CustomPayType_Christmas.png?width=608&height=418&name=Bonus_CustomPayType_Christmas.png) > > 1. If you have completed the 'default entries for standard pay row' in the Employee Profile, the 'Standard Pay' row of the timesheet will be pre-populated. Delete the entry boxes from this row to make it into the bonus-only timesheet. > 1. If you want to include the bonus in an active timesheet, simply add a row below the 'Standard Pay' row by clicking the right + add row sign. > 2. Select the custom pay type you have just created from the menu. > 1. In this example we called the custom pay type '**Christmas Bonus**' so this is what we chose. > 3. Now enter the amount of the bonus to be paid to your employee in a timesheet. > 4. Below the timesheet you will see the option to '**exclude this entry from annual leave calculations**'.  > 1. If this is a discretionary bonus, click this option as in the example. > 2. If this is a regular bonus as part of your employee's contract do not click this option as this is not a discretionary bonus. > > 1. **Update and Save** this timesheet. The **timesheet boxes will be green** when the timesheet has been saved, as in the example. > 2. To check that you have/have not selected to exclude this payment from annual leave calculations, simply **left-click in the entry field** and you will see the Costing screen with your option. --- That is it! 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