Summary

Important: You cannot change some field values on this tab page after you save the Allowances record. Some fields will be disabled in Edit mode so when you set up the allowance, make sure that you select the correct values. Under no circumstances should a consultant or user try to make a 'backdoor' change to these fields.

This tab page contains mandatory fields.

Fields

Type:

PayGlobal uses this field to determine the way that each allowance is paid. This field cannot be changed once the record is saved.

You will notice that the categories listed are linked to single character codes and are used throughout PayGlobal.

For more information, see Allowance Types

Sub-type:

The Sub type field is used for various payroll processes and reporting requirements. The options displayed are country specific.

Australia

These are used solely or in conjunction with the ATO Reporting Category and ATO Reporting Sub-category fields to control STP dataset.

The Paid Parental Leave option is also used to assist management of the Government paid parental leave scheme. For example, tracking when an employee has used up their 10 'keep in touch' days and tracking what the employer has paid to the employee on-behalf if the government.

Note: All allowances used for 'leave' whether balances are tracked in PayGlobal or not must have a non-blank Subtype.

• Blank (default)
• Paid Parental Leave
• Leave Taken
• Leave Cashed-out
• Leave on termination
• Leave Loading Taken
• Leave Loading Cashed-out
• Leave Loading on termination

New Zealand

• Blank (default)
• Employee Share Scheme (New Zealand only)
• Employee Share Scheme With Tax GrossUp (New Zealand only)
• Employee Share Scheme Tax GrossUp (new Zealand only)
•  

Fiji - not used

Note: If you create an allowance with a Sub-type selected, and change the Type value before you save the record, the Sub-type is reset to Blank.

Rate:

The rate used in the allowance is derived from the Rate Code specified on the Rates tab page of the employee record.

The default rate code is used, except for when a Permanent Transaction using the same allowance code has a Rate Code value defined, or the award has an overriding Rate specified. The permanent transaction takes precedence over the award if both have an override.

Rate field options

Unit Rate:

This field is enabled when you enter an override rate in the Rate field.

Use this field in conjunction with the Rate field above.

If you have entered an override rate in the Rate field, then you have the following options:

• You can type a value in the Unit rate field. Use this option for fixed allowances, such as Tea money or First Aid where the value for the payment is the same for all employees. For example, if Meal Allowance = 7.50, then enter 7.50 in the Unit rate field.

  You can attach an allowance to an Award, Period or Internal Company. When you specify a rate in the allowance attached to one of these entities, it will override the Unit rate in the allowance.

• If the rate value is not known until the transaction is entered, then leave this field blank. Use this option for allowances such as bonus payments or commission.

Unit rate is not always a dollar value. The following table explains how the Calculation method that you select determines the Unit rate format.

Max quantity:

Enter the maximum number of units to apply for each transaction. This value places a limit on the Quantity field when creating an allowance in Transaction View. If this field is left blank, then no maximum will apply.

Calculation method:

PayGlobal uses this field to calculate the transaction total for an allowance.

For more information, see Allowance Calculation Methods.

Note: In Australian databases, when you set up leave loading to generate a separate allowance the allowance must have the following settings to process successfully:
- Type = A. Allowance
- Calculation method = K. Leave loading using AL table calculation

Cost Centre:

Every time that an allowance is used, the Cost Centre selected in this field is updated with the value of that allowance. The following options are available:

• Blank

  If this field is left blank, then PayGlobal uses the standard hierarchy to derive the cost centre.

  1. Award
  2. Period
  3. Internal Company
  4. Allowance
  5. Employee

     Important: Proportional costing overrides this standard cost centre hierarchy.

• Enter a valid cost centre

  If a valid cost centre is entered here, then this cost centre code will always apply. However, a cost centre specified in the Award, Period or Internal Company overrides the cost centre that you enter here.

• Use a wildcard cost centre

  You can enter a cost centre as a wildcard entry (*) to generate a cost centre on the fly during transaction entry.

Allowance Group Code:

Active when Calculation method = ‘J’, ‘I’, ‘Z’ or ‘N’. When you select an Allowance Group Code, all of the allowances for that allowance group code are summed using the Type specified in the allowance group record.

The result is used to populate the Quantity field in the transaction for this allowance.

% of Allowance Group:

Active when Calculation method = ‘Z’. The result of the calculation above is reduced by the percentage that you enter here. For example, if the result of the calculation is 2000.00 and % of Allowance Group = 10.00, then the resulting transaction will have Quantity = 200.00.

Back pay allowance:

The back pay allowance is the allowance that is used by automatically generated back pay transactions. In order to fully support automatic back pay processing, every allowance in the system should have a back pay allowance associated with it.

Note: In Australia, the back pay allowance must be of a tax override type of either "Bonus" or "Lump sum in arrears". In New Zealand, the back pay allowance must be of a tax override type of "E. Extra Pay".

Note: The absence of a back pay allowance will be detected during back pay preparation and warnings generated. The back pay will not be able to be confirmed without each included transaction having a back pay allowance associated with it

Paying:

You cannot edit this field after you save the allowance

• Yes

  The value of the transaction forms part of the employee's gross pay.

  Use for the following allowance types:

  Hourly, Salary, ACC, Annual Leave, Leave Credit Paid, Long Service Leave, and Sick Leave.

• No

  The value of the transaction does not form part of the employee's gross pay. Non-paying allowances are used to calculate payments such as payroll tax calculation and Workers Compensation premiums, and are usually levied on the employer.

  Use for the following allowance types:

  Days Worked, Termination, and sometimes for Employer Superannuation, and Leave Credit Accrued.

This field controls the Taxable field. A non-paying allowance is generally non-taxable. A paying allowance can be taxable or non-taxable.

Note: The Paying field does not affect the following allowance types:
T. Tax override
W. Days worked
X. Termination

Penalty:

Generally set to 'No'. This field is commonly used in the health industry to identify penalty payments as opposed to non-penalty payments.

Taxable:

You cannot edit this field after you save the allowance.

• Yes

  If this is a paying allowance, then transactions for this allowance are included in the employee’s gross taxable pay.

  PayGlobal taxes employees according to the rate controlling the allowance.

  Taxation is applied in the following order:

  1. Tax override rate

     In the Tax override drop-down box, select ‘Yes’ and complete the Tax override rate. If the Tax override rate is greater than 0%, then this rate will be used.

  2. Fixed rate of taxation

     If the Tax rate field on the Tax tab of the employee record contains a value greater than 0, then this rate will be used.

  3. Tax code

     PayGlobal checks the Tax code on the Tax tab page of the employee record to determine the correct tax rate to use.

• No

  The value of the transaction will not form part of the employee’s gross taxable pay. Examples of paying non-taxable allowances are Kilometre Allowance, and Reimbursements.

  Note: The Taxable field does not affect the following allowance types:
  T. Tax override
  W. Days worked
  X. Termination

Salary sacrifice (AU):

Defines whether the allowance is used in a salary sacrifice arrangement. Typically most salary sacrifice arrangements involve 'pre-tax' deductions. But for companies that use a 'top-down' salary packaging the use of non-paying allowances is used too.

Allowances set to Yes will have the payroll transaction amounts reported in STPv4 - Salary Sacrifice amounts.

Exempt earner levy (NZ):

Controls whether or not the allowance transaction is included in the calculation of ACC Earner Levy.

Can only be use for "A.Allowance" type allowances

• Yes

  The transaction will not contribute to any ACC Earner Levy.

• No

  ACC Earner Levy will be calculated as normal.

Where the Tax override type is "W. Schedular Payments" or "R. Redundancy/Retirement" then Exempt earner levy is automatically set to Yes but the field is not active.

Exempt SRT/ECAL (FJ):

This field is expected to be used to identify allowances that are subject to "ring-fencing", i.e. to be used for making a payment that FRCS has granted permission to have excluded from SRT/ECAL calculations

• Yes

  The transaction is excluded from SRT/ECAL calculations.

• No

  The transaction is included in SRT/ECAL calculations.

Tax override:

• No

  The value of the transaction is subject to tax scales as per the employee tax rate.

  The most common exception is when:

  • Override = % override
  • Tax override field = 'Yes' and greater than 0%

  In this situation:

  1. The allowance tax override value is determined for the allowance first
  2. The % override value (or the standard or manual tax override) is then applied to the previously calculated allowance tax override % value.
• Yes

  The Tax override rate and Tax override type fields are active.

  You would apply a tax override at allowance level for redundancy payments when you want to apply a fixed tax percentage to a specific payment.

  Note: When Tax override = Yes, the Tax override tab page is visible for the allowance in Transaction View. The Tax override tab allows to you to view or edit the default settings brought through from the Allowance Details (i) tab. PayGlobal uses the details entered at transaction level to calculate the tax override values. Tax overrides are applicable to all allowance types except the following: 'T. Tax override', 'W. Days worked', and 'X. Termination'.

Tax override rate:

Active when Tax override = "Yes". The applicable rate for a tax override.

Tax override type:

Active when Tax override = Yes. If the allowance is for one of the following payments, then select the appropriate override type.

Australian Databases

• (Blank)

  Normal tax override

• Bonus

  Use this option to assist with compliance of the PAYG withholding tax tables – bonuses and similar payments (NAT 7905).

  NOTE: This option should be used for leave that gets 'cashed-out' rather than taken or paid on termination.

  In Bonus transactions, the Override amount value is the number of periods that the transaction is taxed over. Marginal tax calculations for extra payments, such as bonuses, are made only on whole periods. If you enter an Override amount for part of a pay period, such as 6.5, then PayGlobal will truncate the period value to a whole number, such as 6.

  Tax paid on bonus payments are capped at a maximum of 46.5%. The cap will reduce the tax on the payment, but the employee may have to pay the balance owing at the end of the tax year. As a result, if a pay contains an allowance with the new tax override types and the employee receiving the allowance is over the cap, the following type of warning message appears in the process pay audit log:

  "The tax on Bonus/Lump Sum allowance [Allowance Code] (Allowance Description]) has been capped to 46.5% of the payment. Original tax value = [Uncapped tax], capped tax value = [capped tax]. Note that this employee should be notified of a potential tax debt."

  If the Override amount value is set to 0, then the Override Amount on the Tax Overrides tab in Transaction View will default to the pay frequency (number of pays over the year) of the employee in question. For example, 52 for a Weekly employee, 12 for Monthly. This logic will apply to both transactions created directly into Transaction View and those created via Import Pay.

• Lump Sum in Arrears

  Lump Sum in Arrears is calculated over a 12-month period. If the transaction is greater than $400.00, then the value is added to the employee’s Accum (ii) tab | Lump Sum Component E field.

  When you create a transaction for "Bonus" or "Lump Sum in Arrears" allowances:

  • You can edit the Override amount and Override type fields.
  • The default Override amount is the Allowance | Factor value.
  • The default Override Type = "Bonus" or "%".

  These allowances use the marginal tax rates.

  Tax paid on lump sum in arrears payments are capped at a maximum of 46.5%. The cap will reduce the tax on the payment, but the employee may have to pay the balance owing at the end of the tax year. As a result, if a pay contains an allowance with the new tax override types and the employee receiving the allowance is over the cap, the following type of warning message appears in the process pay audit log:

  "The tax on Bonus/Lump Sum allowance [Allowance Code] (Allowance Description]) has been capped to 46.5% of the payment. Original tax value = [Uncapped tax], capped tax value = [capped tax]. Note that this employee should be notified of a potential tax debt."

• CDEP

  From 1 October 2011 payments under the CDEP scheme ceased. However, some participants may still receive such payments under a 'grandfather' arrangement.

  Use this option to assist with compliance of PAYG withholding for CDEP (NAT 12005-06.2008)

  For further information refer to Services Australia website.

• Return to work

  This refers to a payment made to an individual to resume working. It is taxed at a flat rate as specified in Schedule 4 for all employees except working holiday makers. Do NOT use this tax override type for working holiday makers as return to work payments are taxed as part of their normal income.

New Zealand Databases

• (Blank)

  Normal tax override.

• W. Schedular Payments

  When you create a transaction for this type of allowance:

  • You can edit the Override amount field only.
  • The default Override amount is the Allowance | Factor value.
  • Override Type = "%".

  When you process the pay, PayGlobal treats the allowance as a normal tax override and calculates tax accordingly. If the employee is paying Schedular (withholding) tax only, then their employee record must have Tax code = "WT" to distinguish their details in the EMS report. The WT tax code allows you to apply the appropriate tax rate.

• E. Extra Pay

  Applies to the following lump sum payments: Annual or special bonuses, payments for accepting restrictive covenants, exit inducement payments, gratuities, or back pay.

  Overtime or any regular bonus payments are not lump sum payments.

  Important: If an employee has an STC taxation override rate in their Tax rate field, then you must enter this rate in any extra pay transactions (such as bonuses) for that employee. For example, an employee has Tax code = "STC" and Tax rate = 15.00. When you add a bonus transaction for this employee, you must enter Override amount = 15.00 and Override type = % on the Bonus | Taxation overrides tab.

• R. Redundancy/Retirement

  When you create a transaction for "Extra pay" or "Redundancy or Retirement" allowances:

  • You can edit the Override amount and some of the Extra Pay Details fields.
  • The default Override amount is the Allowance | Factor value.
  • Override Type = Xtra Pay Calc.
  • For "Redundancy or Retirement" allowances, the default Redundancy or retirement value = "Yes".
  • PayGlobal automatically calculates the Grossed up annual amount when you add the allowance transaction.
• S. ESCT

  Available when Type = "Z. Employer Super" and Tax override = "Yes".

• B. Regular Bonus

  Applies to bonus payments you pay where the frequency at which you pay your employees their bonuses is less than the frequency they receive their normal pay, e.g. a weekly/fortnightly employee that receives monthly bonuses. A monthly employee that receives quarterly/six-monthly bonuses.

  Intended only for use when Type = "A. Allowance".

Fijian Databases

• (Blank)

  Normal tax override.

• Bonus

  Bonuses are now taxed as part of ordinary annual income from salary and wages. The tax on bonuses use the estimate of annual income (excluding the bonus) to determine the additional tax to pay. This results in the tax on the bonus and it is paid in the period which the bonus is paid.

• Withholding tax
• Extra Ordinary Payment
• Redundancy or Retirement

  The taxable portion of a redundancy payment is not subject to the Social Responsibility Tax (SRT). You need to use two redundancy allowances: one for the non-taxable portion and the other for the taxable portion. Use allowances with Tax override type = “Redundancy or Retirement” and Tax override rate = 15 for the taxable portion of redundancy payments only.

  Retirement payments can be completely tax-free, partially tax-free or completely taxable. If the payment is taxable, it is subject to SRT. You need to use two retirement allowances: one for the non-taxable portion and the other for the taxable portion. Use allowances with Tax override type = [Blank] and Tax override rate = [Blank] or the applicable rate for the taxable portion of retirement payments only.

  Important: Do not use "Redundancy or Retirement" for retirement allowances because it will not calculate tax correctly for Fiji.

Factor:

This field determines the final calculation for the transaction:

(Quantity * Unit Rate * Factor) = Transaction Total.

The factor is generally 1.0.

• The factor is greater than 1.0 for overtime allowances, For an overtime allowance paying time and a half, the factor is 1.5.
• The factor is less than 1.0 for penalty type allowances, such as a shift allowance.

  Important: Allowances with Calculation method = I, J, Z, M, L, N, T, A, K, E, or R support only Factor = 1.0000. If you select one of these Calculation methods, then Factor is set to 1.0000 and the field is disabled so you cannot change it.

Allowances with Type = L. Annual Leave and/or Calculation method = G. Percentage of gross are not affected by the value in the Factor field. PayGlobal does not use the Factor value when it processes the transaction.

Rank:

Enabled when Calculation method = G, C, A, I, J, M or Z. Use this field to determine the order that the following percentage-of-gross style allowances are processed.

• G. Percentage of gross
• C. Percentage of standard earnings
• A. Super calc with monthly minimum (Australia only)
• I. Percentage of allowance group
• J. Average of allowance group over x weeks
• M. % of min of gross or std earn
• Z. Percentage of allowance group to quantity.

A percentage-of-gross style transaction contributes to Superannuation gross or annual leave gross. It includes contributions made to the taxable gross by other percentage-of-gross style allowances processed before the current allowance.

See Ranking Rules.

Show on history Analysis leave calendar:

If you select Yes, then the allowance code will be displayed in the Leave Calendar. This field is disabled for the following allowance types because they display in the Leave Calendar regardless of whether the field is set to 'Yes' or 'No'.

• L. Annual Leave
• S. Sick Leave
• O. Long Service Leave
• V. Leave Credit Paid

See also

Allowances

Allowance Transaction Hierarchy

Allowances - Details (ii)

Allowances - Coding Conventions

Allowances - Factors to consider