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Allowances Types

Allowances (additions/deductions) are an extremely versatile option within Wagemaster. Of all the different items that may be entered as allowances, they could be roughly grouped into 4 main categories; additions before tax; additions after-tax; deductions before tax & deductions after tax.

The easiest way to work out if it should be before or after-tax is to visualise the payslip. 

  1. Go to the Setup > Allowances.
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  2. Click on the Add icon and complete the Allowance Wizard.11.png

Option: 1 - Addition Type, Taxable

This will give the employee more money in their taxable or gross income.

On the payslip:

Gross (Taxable) pay will increase.

Tax will increase.

Net pay will increase.

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Please Note

If this allowance attracts SGC (Employer Super), tick the Include in Super Calculation box.

Examples of this would be uniform, tools, back pay allowances.2.png

Option: 2 - Addition Type, Not Taxable

This type of allowance will increase the employees take home (net) pay, but will not have any effect on their tax.

On the payslip:

Gross (Taxable) pay will not increase.

Tax will not increase.

Net pay will increase.

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Please Note

If this allowance attracts SGC (Employer Super), tick the Include in Super Calculation box.

Examples of this would be car/mileage reimbursements.4.png

Option: 3 - Deduction Type, Taxed Ticked To Reduce Taxable Earnings

The employee has a deduction setup specifically to reduce their taxable or gross income. This is a salary sacrifice and often a part of salary packages.

On the payslip:

Gross (Taxable) pay will reduce.

Tax will reduce.

Net pay will reduce.5.png

Please Note

If you want this deduction to reduce the Employee's SG Gross (Superable Earnings), tick the Include in SG Gross box.

Examples of this would be an employee salary sacrificing for a computer, car, mortgage, rent. etc.6.png

Option: 4 - Deduction Type, Taxed Unticked Does Not Reduce Taxable Earnings
You are making a deduction from an employee’s wage that should not affect their tax contribution. It needs to come out of their take-home (net) pay.

On the payslip:

Gross (Taxable) pay will not reduce.

Tax will not reduce.

Net pay will reduce.7.png

Examples of deductions after tax are garnishees, child support payments and social club contributions. 8.png

Other Items To Consider When Entering Allowances

Superannuation

Should the allowance be included in the super calculation? I.e. should you tick the Include in Super Calculations box in the allowance setup screen?
If the allowance would be considered part of the employee's normal earnings (OTE), then it should be included in super (and the Include in Super Calculations box ticked). Things that would be considered part of normal earnings would be back pays, award allowances, commission/bonuses (that are part of an employee’s contract).

Important

Be careful ticking the Include in Super Calculations and Include in SG Gross boxes, in the case of a deduction, as it will reduce an employee’s superannuation and superable earnings.

Unit-based/Standard Allowance

Unit-based allowances are used for piecework or where an employee gets a set amount per unit – e.g. 0.68 cents per kilometre, therefore you only need to enter in how many kilometres the employee has travelled. Most allowances are standard allowances. 9.png

Frequency

Each Pay – Used for back pays & one-off payments, third party deductions i.e. HBA, Social Club.

Weekly – Used for an employee with a weekly allowance, who gets paid fortnightly or monthly.

Each Shift – Used for uniforms, tools, first aid.

Hourly – Often used when employees get an allowance for working in different departments or higher duties.

Percentage - Used for child support garnishees.

You will also need to complete payroll configuration in Agrimaster for all allowances to ensure these transactions are coded correctly in your cashbook. 

Important 

We recommend entering the hours through a timesheet. However, you can check with your accountant if that is a mandatory requirement for the industry and awards that apply to you.

As part of annualized salaries from 1st March, employers need to record the annual wage arrangement in writing and give their employees a copy.

This has to include:

  • The annual wage that will be paid.
  • Which award entitlements are included in the annual wage.
  • How the annual wage has been calculated, including any assumptions used in the calculation.
  • The maximum (or outer limit) number of penalty hours and overtime hours the employee can work in a pay period or roster cycle without extra payment.

The employer must also record the employees:

  • Starting and finishing times.
  • Unpaid breaks are taken.

Employees have to acknowledge the record of hours they've worked is correct by signing in writing or electronically at the end of every pay period or roster cycle. This record is used for annual reconciliations. You can refer to the fair work website for further details:

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