Thankyou Payroll help Employee SettingsCreating a custom Pay Type for Allowances/Deductions

Creating a custom Pay Type for Allowances/Deductions

A custom Pay Type can be created for situations where you need to make a payment/deduction outside of the standard Pay Types.

For example: Backpay, Bonus payment, Phone Allowance, Vehicle Allowance, Tool Allowance, Employee works another job with different rate, Rent Allowance, Accommodation Allowance, WINZ deduction, Rent deduction, Accommodation deduction.

There are two options for loading these Pay Types; either taxable or non taxable. Make sure you create the Pay Type under the correction section.

Creating a custom Pay Type

From the employee Profile click on the "pay types" tab

1. Pay types created here will be taxed.  

2. Pay types created here will be non-taxable

3. Give your pay type a name that will be recognisable in a timesheet

4. Value of rate.  This can be 1 for an allowance or -1 for a deduction, you can then enter the full value into the timesheet, OR you can enter the full value in rate and then enter 1 into the timesheet.  See examples of this further down.

5. Select per unit if using 1 or per hour/day/week/year/ if entering full value.

6. Here you can enter codes for tracking purposes

7. Once you have created your Pay Type don't forget to click "save".


WINZ deduction

We have not yet automated employee WINZ payments so it is necessary to create a custom pay type that deducts the payment amount from your employee's NET pay, then you can create a manual / automatic payment to WINZ (via your bank) as per their instructions.

Go to the lower section: 'Non taxable pay types and allowances'

  1. Set the name: 'WINZ deduction' (or any name that you will clearly recognise in the list of pay types on the timesheet)
  2. Set the rate to '-1'. The system will treat this as $1 to subtract per unit .  Variations are possible here i.e. you can set it to '1' and in the timesheet remember to set it to '-30', OR you can set the whole deduction amount '-30' and in the timesheet enter just '1' in the WINZ deduction row. Each option will result in the same outcome.
  3. Set 'per unit'.

Once the Pay Type is created you can now add a row in the timesheet for this Pay Type.

1. Be sure to use the + icon on the right to add a line not a week

2. Select Pay Type you have created from the list

3. Enter the amount to be deducted

Don't forget to click "update and save" once you have completed the timesheet.

1. Pay summary shows the deduction

The "you deposit" amount on the Dashboard will not include the deduction amount.


Taxable Accommodation Allowance

In some cases you may want to include a taxable accommodation allowance in your pay to an employee, and then deduct the cost of accommodation from them.

For example, if your employee lives on your property and you agree that they will get an accommodation allowance of $100 a week and you will charge them $150 to stay on your property. The employee still needs to pay tax on the $100 that you are giving them as an allowance.

To set this up you would use custom pay types.

Add the allowance as a Normal pay type (taxed) (100 per unit) and the amount you want to deduct as a Non taxable deduction with the rent you are charging as a negative (-150 per unit).



There are times when you may forget to change the pay rates for an employee that is meant to have a pay rise which will require a back pay for the period that has been under-paid. To do this, you will create a new custom pay type in the employee's profile under the pay types tab.

The new pay type created for Backpay should be entered under the Normal pay types and allowances [taxed].

Below is an example where Ethan had a raise of $3.00 per hour. For the last fortnight he should have been paid on the new rate but was paid at the old rate. With the new pay, a Backpay will be done for $3.00 per hour for the 40 hours that he worked each week.

  1. In the employee profile, go to the pay types tab and add the name for the pay type being created. This will be under the "Normal pay types and allowances [taxed]"
  2. Add the rate, which in this example will be the difference in the amount per hour originally paid and what should have been paid ($3.00)
  3. Leave it as rate per hour
Optional custom pay types - Google Chrome

In the timesheet entry and reporting page, enter the standard pay as you would normally enter for a pay.

  1. Add a new row to the timesheet
  2. From the drop down list where it says "select type", select the new pay type created (Backpay)
  3. Enter the total hours that needs to be back paid at that rate
  4. Update and save
  5. To confirm the correct amount being paid, click inside the box where you have entered the total hours. You will see the amount below in the costing/tracking section which should match the amount required to be paid

Note: this is just one way of setting up a back payment. Depending on the size of the back pay it might be better setting up a rate of 1 per unit for a custom pay type, and entering the total dollar value in a timesheet. The size of a backpay on top of standard wages will also affect tax, so if it's large the employee may be better off having it done in a one-off pay run. 

Leave without pay

Generally if an employee isn't paid you don't need to create a timesheet for them. If you want to record leave without pay, you will have to create a new pay type and set it to pay at a zero dollar value.

  1. In the employee profile, go to the pay types tab and add the name for the pay type being created. This will be in the Normal pay types and allowances [taxed] section.
  2. Add the rate which for leave without pay: 0.00.
  3. Leave it as rate per hour, though the rate doesn't really matter (You will be entering the normal hours this person would have worked if they were working that week in the timesheet)
Optional custom pay types - Google Chrome

In the timesheet entry and reporting page, instead of the "standard pay" pay type, you will select the new pay type created for leave without pay.

  1. Add the new pay type created for "Leave without pay"
  2. Enter the hours this employee would have worked if they were at work
  3. Update and save, the pay summary should have a zero dollar value for the gross and pay day transfer

Note: If you only have one employee in a given pay run recording leave without pay, that pay will not process. Any pay worth $0 will need to be processed manually by us. Pleas send an email request to to process these pay runs.