Child pages
  • Set up pay items (earnings and deductions)


 

 

On the Pay items - earnings & deductions tab, you can create and assign pay items to your employees. These might be earnings, such as penalty rates (Australia) or additional pay rates (New Zealand) for weekends or public holidays, commissions or bonuses.

Or, it might be a deduction, such as union fees or child support payments (New Zealand).

Can't enter earnings or deductions?

If there's no fields available to enter earnings or deductions, you're probably using Microsoft Edge, the web browser in Windows 10. You'll need to enter employee details using a different web browser, like Chrome or Firefox. (What browser am I using?)

Accessing pay items 

There are two ways to manage pay items - globally through the Pay items page, and through each individual employee's page.

On the Pay items page you can create, edit, and delete pay items. To open the Pay items page, click Payroll > Pay items.

On an employee's page you can create, edit, and link or unlink pay items. You can access an employee's earnings and deductions from the Payroll menu > Employees > click the employee > Pay items - earnings & deductions tab.

You need to add an earning or deduction here before it will be available on the employee’s pay run, and any earning or deduction you create is available to add to any of your employees in MYOB Essentials.

Example

You create a holiday penalty rate for John Smith, and this new rate will appear on the pay run for this employee. If you then want to make this holiday rate available to Jackie Brown, you need to access Jackie's Pay items - earnings & deductions tab and select the holiday rate from the dropdown list.

When you pay them, you can enter the number of hours required, and the rate per hour.

Setting up earnings, allowances, bonuses and commissions

Setting up earnings, allowances, bonuses and commissions

In addition to their ordinary salary or wages, you can set up other pay items to include in an employee's pay. You'll be able to enter hours and/or amounts for each pay item when you process the pay run.

If you're adding an earning you've already created (i.e. an earning found in the Pay items page), select it from the Add earning dropdown list.

If you're creating a new earning, select + Create new earning in the dropdown list. The Create new earning window appears.

 

Start by choosing an earning Type.

TypeDescription
Standard earning

Select this if you want to pay some hours at a different rate to ordinary pay (for example, penalty rates (Australia) or additional rates (New Zealand)). You can add as many standard earnings as you want to cover different situations, such as public holiday pay or Sunday pay.

Allowance

Allowances are payments you make to employees on top of their pay. For example, you might pay an employee a travel allowance to cover the expenses of driving to meetings with clients, or a uniform allowance to cover the cost of their uniform.

You can see a description of some common allowances on the ATO website (Australia) or the IRD website (New Zealand).

When you create a new allowance, the amount you enter in the Amount field will be the default amount per pay. You can change this amount when you process the pay run.

Bonus

Bonuses are payments that apply to more than one period (for example, you might pay your employees a quarterly bonus for performance).

Whenever you want to pay a bonus, enter the bonus amount on the Bonus line in the pay run.

Learn more about bonus payments

Commission

Commissions usually relate to a single pay period.

Whenever you want to pay a commission, enter the commission amount on the Commission line in the pay run.

Learn more about commission payments  

Once you select an earning Type, enter a Name to help you identify it on the pay run, choose a Rate (fixed amount or per hour), and enter an Amount.

Note that the amount you enter in the Amount field will be the default amount per pay. You can change this amount when you process the pay run.

Taxable and non-taxable earnings

Depending on the employee’s job, an earning might be added to the employee’s pay before or after tax is calculated. If an earning is added before tax, you need to withhold PAYG tax on it. Otherwise, you don’t.

Use the ATO website (Australia) or Inland Revenue website (New Zealand), or consult your accountant if you’re not sure whether an earning is taxable or not.

Some earnings are non-taxable up to a certain threshold. After this threshold is reached, you’ll need to start withholding tax. To deal with these cases, you’ll need to set up two earnings:

  • an non-taxable allowance, to use for payments up to the threshold
  • taxable allowance, to use for payments over the threshold.

Earnings included in super calculations (Australia)

Some earnings may need to be included in superannuation guarantee calculations. If so, select the Pay super on this earning option.

See the ATO guidelines for details about which earnings should be included in super calculations. 

ATO reporting category (Australia)

Single Touch Payroll is an ATO initiative to streamline payroll reporting. The ATO reporting category determines if and how an earning is reported to the ATO. For more information on Single Touch Payroll, see

Earnings excluding CEC (New Zealand)

Some earnings, including allowances for accommodation overseas, other costs of living overseas, and (from the 2014-15 tax year onwards) payments under the voluntary bonding scheme are excluded from CEC paid by employers.

If the earning is excluded from CEC, select the Exclude CEC option.

See the Inland Revenue website for details about which earnings are excluded from CEC. 

Setting up deductions

Setting up deductions

Deductions are payments you take out of employees’ pay, for things like union fees or child support. See the ATO website (Australia) or Inland Revenue website (New Zealand) for a description of some common deductions.

If you're adding a deduction you've already created (i.e. a deduction found in the Pay items page), select it from the Add deduction dropdown list.

If you're creating a new earning, select + Create new deduction in the dropdown list. The Create new deduction window appears.

Before-tax and after-tax deductions (Australia)

Depending on the employee’s job, some deductions might be taken out of the employee’s pay before tax is calculated, reducing the amount of tax they pay. These before-tax deductions are also referred to as 'tax deductible'.

To find out if a deduction is taken before or after tax is calculated, see the ATO website or consult your accountant.

The deduction Type specifies if it's a standard deduction (for example, union fees) or for additional superannuation payments (salary sacrifice or personal contributions). To learn more about setting up your employees' super, see Set up employees for paying super.

Super salary sacrifice will be automatically set to Before tax, and Super personal contrib'n will be automatically set to After tax. To prevent pay run errors, these tax fields cannot be changed.

ATO reporting category (Australia)

Single Touch Payroll is an ATO initiative to streamline payroll reporting. The ATO reporting category determines if and how a deduction is reported to the ATO. For more information on Single Touch Payroll, see

Before-tax and after-tax deductions (New Zealand)

Depending on the type of deduction, it might be taken out of the employee’s pay before or after tax is calculated.

  • After tax deductions are taken out of an employee’s pay after tax is calculated. These are also known as post-tax deductions.
  • Before tax deductions are taken out of an employee’s pay before tax is calculated, reducing the amount of taxable income. These are also referred to as pre-tax deductions.

To find out if a deduction is taxable or non-taxable, see the Inland Revenue website or consult your accountant.

Child support (New Zealand)

If you are required to make child support deductions for an employee, you will be notified by the IRD of the amount to deduct.

Employees who pay child support are entitled to keep 60% of their net (after-tax) earnings. If a child support deduction will leave the employee with less than 60% of their net pay, MYOB Essentials will automatically adjust the child support deduction to comply with the protected net earnings rule.

Court fines (New Zealand)

If the Ministry of Justice notifies you by letter to deduct money from an employee's pay and pay it to them, you need to set up a court fines deduction.

Employees who are required to pay court fines are entitled to keep 60% of their net (after-tax) earnings. If a court fines deduction will leave the employee with less than 60% of their net pay, MYOB Essentials will automatically adjust the court fines deduction to comply with the protected net earnings rule.

Want to add an SLCIR deduction? You can enter compulsory extra deductions (SLCIR deductions) from the Tax tab in the employee profile.