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To reimburse an employee for an expense they've incurred on behalf of your business, you can set up a new pay item. This will add the reimbursement to the employee's next pay.
Let's step you through it.
Create a new pay item
- From the Payroll menu, choose Employees.
- Click the employee to be reimbursed.
- Click the Pay items - earnings & deductions tab.
- Under the Earnings section, click the Add earning arrow and choose Create new earning.
- Set up the earning:
- For the Type, select Standard earning.
- Enter a Name to describe the reimbursement.
- If you'd like a different, more personalised, name to show on payslips for this earning, enter a Name for payslip, such as "Reimbursement for stationery".
- For the Rate, select Fixed amount.
- Enter the Amount of the reimbursement.
- For the Tax, select whether the reimbursement is taxable or non-taxable. Check with the ATO/IRD or your accounting advisor if unsure.
- In Australia:
- Leave the Super option deselected.
- Select the applicable ATO reporting category for Single Touch Payroll reporting. If unsure, check with your accounting advisor or the ATO. Learn more about Assigning ATO reporting categories for Single Touch Payroll.
- In New Zealand:
- Leave the Exclude CEC option deselected.
- If applicable, select the option Exclude from gross earnings for leave calculations. If unsure, check with the IRD.
- Click Save.
The earning will now appear on the employee's next pay as shown in the next task.
Pay the reimbursement
- Go to the Payroll menu and choose Enter Pay.
- Select the employee to be paid then click Start Pay Run.
- Confirm the reimbursement amount. You can change the amount here if needed.
Here's our example $100 reimbursement.
- Finish processing the pay as normal.
Is this a one-off reimbursement?
After paying the reimbursement, you can unlink the pay item from the employee. This removes the pay item from that employee, but keeps the pay item for future use (if you need to reimburse an employee again, you can modify and assign the pay item to them).
To unlink the pay item from the employee
- Go to the Payroll menu and choose Employees.
- Click the employee.
- Click the Pay items - earnings & deductions tab
- Click the ellipsis button next to the pay item and choose Unlink from employee.
- Click Save.