In conjunction with standard timesheet payments, you can also add allowance and deduction amounts to your payroll to modify the amounts that the employees will receive, make adjustments to employee YTD earnings, and allocate earnings to different bank accounts
The following guide details how you can prepare both standard "Allowances Sets" as well as individual "Employee Allowances" to allow for additional payment options at payroll
This article contains the following items;
- Allowance & Deduction Templates
- Assigning Allowance Templates To Employees
- Assigning Employee-Level Allowances
- Allowances Amounts Within Payroll
- Adding Allowances Within Payroll
- Allowance Options
- Additional Allowance Options
The Payroll Adjustments (Allowances & Deductions) - Examples article details some common allowance/deduction configuations. Allowance & Deduction Templates
The allowance templates provide an option to build a list of allowances that can be applied to a range of employees. Changes to these allowances will reflect across all linked employees.
This is done using the Setup > Allowance and Deductions menu item.
There are many other options available with this and these are provided in further detail in the Allowance Options section of this guide.
Assigning Allowance Templates To Employees
Once you have created your allowances sets, the next step is to assign them across your employees, so they can be used within the payroll.
To do this open the Employee Details screen, select the Pay tab and then set the Allowance Set dropdown.
IMPORTANT: The allowance templates are not individual to the employees, and changes will reflect across all linked employees. An example of this is if a value is set on the allowance directly the amount will be applied across all employees at payroll.
Assigning Employee-Level Allowances
Employees can also be assigned individual allowance items that will only apply to their employment instance. items added to this section will need to be manually updated.
Allowances Amounts Within Payroll
You have the ability to view and/or update amounts for allowances that have been set against employees within your payroll. To do this you will need to create a payroll, then use the options dropdown for the employee record and view the Payslip.
For a walkthrough on this process please see the guide below.
For information on how to access the payslip screen please see the Processing Payroll - Payslip Detail guide.Adding Allowances Within Payroll
In conjunction with being able to add allowances directly against the allowance sets and the individual employees, you can also access these areas within the Payroll > Payslips screen, through the Menu items.
Please remember that changes made to the Allowance Sets will affect all employees linked to that allowance set, not just the selected employee.Allowance Options
The options available on the allowances/deductions allow for a lot of different conditions, and as such, some users can find it a bit daunting when first viewing them, the purpose of this section is to break down and explain the uses for the different fields that are available.
The first and most obvious field is the Name of the allowance, this field is what the system will use to show at payroll and will also show on the employee's payslip if an amount is paid within that period. 
The Active option allows you to indicate whether or not you would like to enable \ disable this allowance within the payroll screen allowing you to keep it there for later re-use or historical purposes.
The next field to look at is the Type. This dictates how you wish to treat the allowance 
This field has several options and selecting them will change the allowance option display for those scenarios
- Generic
Provides a full range of options available for use within this screen. - Normal Allowance
This is the default option and lists the most commonly used option set for allowances. - Child Support (Garnishee)
Defaults the payment to be treated as a separate pay disbursement to a selected bank account, this is also reported as a unique type to the ATO. - Child Support (Deduction)
Defaults the payment to be treated as a separate pay disbursement to a selected bank account, this is also reported as a unique type to the ATO. - JobKeeper Allowance
Set the options required for the payments for the JobKeeper allowance program. - Employee Salary Sacrifice
Defaults the payment to be treated as a before-tax deduction, this is also reported as a unique type to the ATO. - Super Salary Sacrifice
Defaults the before-tax amount to be allocated to a superfund rather than the gross wage, this is also reported as a unique type to the ATO. - Super Co Contribution
Defaults the after-tax amount to be allocated to a superfund rather than the net wage, this is also reported as a unique type to the ATO.
For the moment we are going to stick with the option shown in the Normal Allowance options.
Next, we need to indicate to the system the Process As type. This will determine where within the payroll the payment or deduction will sit and how it will be treated for tax purposes.
- Before Tax Allowance
Amounts added to increase the Before-tax wage within a period. - Before Tax Deduction
The reverse of the Before-tax allowance, in that it allows for amounts to be removed within a payroll, the amount needs to exist within the payroll prior to this point. - Tax Allowance/Rebate
Reduces the amount of tax the employee will be set to pay within the payroll. - Additional Tax
Increases the amount of tax the employee will be set to pay within the payroll. - After Tax Allowance
Grants an additional amount to the employee's net wage. - After Tax Deduction
Deducts an amount from the employee's net wage. - Reimbursement GST Inclusive:
For employee purchases on behalf of the company, such as stationery. - Reimbursement GST Only:
Are for the GST component only. Mostly used for contractors. - Reimbursement GST Exclusive:
For employee purchases such as fresh fruit for staff breakfast. - Pay Disbursement
Allows the user to allocate a portion of the employee's net wage to a separate bank account.
For most of these options there is a YTD varient, this allows you to make adjustments to the employees YTD balances within the payroll process but outside of the payrolled amounts thus allowing for corrections to be made without additional employee payments or deductions. Next, we have the PAYG Location field. This allows you to determine where the allowance will be directed for ATO purposes.
- Gross Salary & Wages
This is the most common and therefore the default option and will allocate the allowance amounts to the employee's gross wage. - Allowances
This PAYG type allows for the assigning of the amounts to be reported to the ATO outside of the gross wage amount.
If you are unsure as to if you need to process your allowance in this way we recommend that you contact the ATO, FairWork, or your industry governing body for further advice.
When this option is set you will also be required to set a corresponding STP Type.- Award Transport Payments
- Bonus and Commissions
- Cents per KM
- Directors Fees
- Laundry
- Overtime Meal
- Qualifications/Certificates
- Other
- Tasks
- Tools
- Travel
- Fees
- Workplace Giving
- Union Fees
Allocates the allowance amount paid to union fees to the ATO. - CDEP
Allocates the allowance amount paid to Community Development Employment Projects (CDEP) to the ATO.
Next, you can set the Amount and payment frequency options against the allowance
The amount field has four separate modes
- Employee Base Rate
Uses the employee's hourly rate as defined on the pay tab within the employee details screen.
Fixed
This is the default value and uses a customizable amount (defined on the field to the right of this)Minimum Rate
Compares the employee's base rate vs. any special rates for the affected timesheets and uses the lowest pay rate available.Percentage Of Wage
Pays the allowance based on a percentage of the employee's current payroll wage.
Once chosen you can set the amount that you wish the allowance to be paid at.
Once done you can also specify the per timeframe that you wish the allowance to apply for.
When setting this please keep in mind that this will not cross over multiple pay periods, ie if you are processing this allowance weekly setting this to fortnightly will still trigger this once per payroll.
TIP: Setting an amount here will indicate to the system that you wish to make a recuring payment to the employee. If you are doing a one off payment to an employee you may wish to skip this step as the amount for the allowance can be directly entered in at the point of payroll.
Next, are the options for the department and cost allocation.
These options allow you to indicate where the costing will be assigned to for reporting and payroll journaling purposes.
The Options button provides some additional payment settings.
- Display Allowance Name in E.F.T
This option is used for the "Pay Disbursement" process as type. and allows for the amount to be identified easily on the bank file once submitted to the bank. - Include in Payroll Tax
Determines whether the amount will be considered for the Payroll Tax calculation. - Include Paid Breaks
This only affects the allowance created when using the Per types that require timesheets. - Pay In Next Pay Only
Automatically reduces the amount for the allowance to 0 after the pay run, this is useful to prevent accidental overpayment from one-off adjustments. - Include/Exclude in Super Earnings Base
Determines whether or not the allowance amount should be considered for the super calculations.
We also have a button for Export Options, this will allow you to configure journal codes your allowance to be used when exporting into other systems and the options available will be covered in those related guides.
For further assistance on this, we encourage you to have a look at the Allowance/Deductions Examples article.
Additional Allowance Options
As detailed in the previous section the Generic allowance type will enable access to an extended range of options. Adjusting the additional settings within this type is optional.
On
This allows for advanced triggering for the allowance for items such as if they worked more or less time for a shift, they work excessive overtime, they work a set number of hours past their shift end, or if they have split shifts within a single period.
Day
Allows for the allowance to be selectively called on specific days of the week.
When
Allows the allowance to be paid if the employee worked either before, after, or between a specified time range.
Capping Period
Allows you to set a limit on how much an allowance can accumulate within a payroll, please note that this value is not designed to cross between payrolls.