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.

This article contains the following items;

  1. Allowance Templates
  2. Assigning Allowance Templates To Employees
  3. Allowances Within Payroll
  4. Allowance Options
  5. Additional Allowance Options

Allowance Templates

The allowance templates provide an option to build a list of allowances that can be applied to new and existing employees to give you a base level of prebuilt allowances to reduce the need for manually adding them to each employee individually.

To create an allowance template open the Allowance & Deductions screen as shown below.

On your account creation, the system generates a base allowance set labeled Default, at this point you can either click to select this option or use the Add Allowance button to create another allowance set for use.

If you chose to add a new allowance set, the first step is to give it a name and if desired a description regarding its purpose.

Once that is done click the Add button to create an allowance item.

This will present you with the options available for setting the allowance. These settings default to paying a before-tax allowance to the employee, in which you can pay a fixed amount per your chosen pay cycle. 

There are many other options available with this and these are provided in further detail in the Allowance Options section of this guide.

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Assigning Allowance Templates To Employees

Once you have determined the default listing of allowances, the next step is to assign them to the employees so they can be used within the payroll.

To do this open the Employee Details screen click to select the employee and navigate to the Pay Tab.

Once done, scroll down to the Allowances section and click the Select button.

IMPORTANT: Once the allowance template has been applied to the employee it is considered seperate from that point forward. As such any changes to the allowance set template will not reflect against the employee's allowance listing.

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Allowances Within Payroll

To view or update an amount for an allowance within payroll you will need to open the employee's Payslip screen within the payroll draft, to do this please refer to the Processing Payroll - Payslip Detail guide.

For this example, I have set a before tax backpay allowance up against the employee with the following settings

As this is a before tax allowance it will appear within the Gross Payments section of the payslip screen, to view the allowance expand the Allowances/Deductions option.

From there you can view and or set the value of the allowance using the Amount column

The type of allowance will determine the flow of where it is placed within the payslip screen, for example, the above example shows a before tax allowance so it, therefore, will sit within the Gross payments section.

Tax adjustment allowance will sit within the Tax section.

After-Tax allowances will sit within the Net Payments section

After-tax super co-contributions will show in the Super section

PLEASE NOTE: In order for allowances to appear within the payroll they must have the following
1. Be linked to an allowance template.
2. Have the allowance setup within their employee profile.

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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 without the need of removing it entirely.

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

  1. Generic
    Provides a full range of options available for use within this screen.

  2. Normal Allowance
    This is the default option and lists the most commonly used option set for allowances.

  3. 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.

  4. 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.

  5. JobKeeper Allowance
    Set the options required for the payments for the JobKeeper allowance program.

  6. 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.

  7. 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.

  8. 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.

  1. Before Tax Allowance
    Amounts added to increase the Before-tax wage within a period.

  2. 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.

  3. Tax Allowance/Rebate
    Reduces the amount of tax the employee will be set to pay within the payroll.

  4. Additional Tax
    Increases the amount of tax the employee will be set to pay within the payroll.

  5. After Tax Allowance
    Grants an additional amount to the employee's net wage.

  6. After Tax Deduction
    Deducts an amount from the employee's net wage.

  7. Reimbursement GST Inclusive:
    Are employee purchases on behalf of the company, such as stationery.

  8. Reimbursement GST Only: 
    Are for the GST component only. Mostly used for contractors.

  9. Reimbursement GST Exclusive:
    Are employee purchases such as fresh fruit for staff breakfast.

  10. 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. 

  1. 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.

  2. 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

  3. Union Fees
    Allocates the allowance amount paid to union fees to the ATO.

  4. 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

  1. Employee Base Rate

    Uses the employee's hourly rate as defined on the pay tab within the employee details screen.

  2. Fixed
    This is the default value and uses a customizable amount (defined on the field to the right of this)

  3. Minimum Rate
    Compares the employee's base rate vs any special rates for the affected timesheets and uses the lowest pay rate available.

  4. 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.

  1. 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.

  2. Include in Payroll Tax
    Determines whether the amount will be considered for the Payroll Tax calculation.

  3. Include Paid Breaks
    This only affects the allowance created when using the Per types that require timesheets.

  4. 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.

  5. 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.

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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.

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.


Allows for the allowance to be selectively called on specific days of the week.

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.

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