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https://help.myob.com/wiki/x/wxGc
ANSWER ID:9156
As part of an award, agreement, contract or industry norm, employees may be paid a series of allowances in respect of a particular condition of their employment, such as the following example:
The employees of a real estate agency are paid a weekly travel allowance to help cover the costs of transporting clients to see properties. The allowance is fixed at $200 per week regardless of the number of kilometres travelled. The allowance is tax exempt and is subject to Superannuation Guarantee provisions.
This page describes how to set up employee allowances based on the above example, but the same principles apply for all employee allowances.
Want to see how to setup employee allowances?
Watch our demonstration video.
Setting up a new wage category
This task explains how to set up a wage category to cater for the specific employee allowance. If you have different allowances for different employees, such as varying meal allowance rates for different employees, complete this task for each allowance.
- Go to the Payroll command centre and click Payroll Categories.
- Click the Wages tab and click New. The Wages Information window is displayed.
- Name the new category, for example Travel Allowance, and set the Type of Wages option to Hourly.
- For the Pay Rate select the Fixed Hourly Rate of option and enter $200 in the field provided. If the allowance is to be paid by kilometre then the rate could be set to the amount paid for each kilometre.
- You have the option of overriding the linked expense account for amounts paid under this category. By default, the wages and salaries expense account is used. You may want to override this and link to another account to separate travel expenses from other payroll expenses as shown below.
Note: If you want to separate travel expenses from other payroll expenses as shown in the example above, a new expense account will need to be created to cater for this. - Click Employee and select the employee(s) eligible for the allowance.
- Click OK.
- If the allowance is exempt from tax*, click Exempt and select the PAYG Withholdings category. *Not sure if the allowance is tax exempt? Check with your accountant or the ATO.
- Click OK to return to the Wages Information window. If the allowance is not to be included in the calculation of Superannuation Guarantee contributions (check with the relevant workplace authority if you're not sure):
- Click OK to the Wages Information window.
- Click the Superannuation tab of the Payroll Categories list.
- Click the zoom arrow next to the Superannuation Guarantee category then click Exempt.
- Select the Travel Allowance category so that it is excluded from the calculation of superannuation.
- Click OK to the Wages Exemptions window then click OK to the Superannuation Information window.
- Click OK to the Wages Information window.
- Click the Entitlement tab of the Payroll Categories list.
- Click the zoom arrow next to the Holiday Leave Accrual category then click Exempt.
- Select the Travel Allowance category so that it is excluded from the calculation of your leave accrual.
- Click OK to the Wages Exemptions window then click OK to the Entitlement Information window.
- Repeat for any other leave accruals that are based on Gross Hourly.
- Click OK to the Wages Information window.
Paying the allowance
When the time comes to process the employee's paycheque, the new allowance wages category will be available for the specified employee. In this example, you would enter '1' in the Hours column against the Travel Allowance category to pay 1 week's travel allowance of $200 as shown below.
Note: If the allowance is paid on the basis of kilometres travelled, then the kilometres travelled would be entered in the Hours column.
Allowances and your payment summaries
Employee allowances and tax obligations vary from business to business, so it's recommended you check with your accountant or the ATO regarding how allowances should be handled on your payment summaries. For more information on using the Payment Summary Assistant in your software, see Prepare payment summaries.
If you are required to specify an allowance separately to Gross Payments on your payment summaries, you can do this at the Payment Summary Fields step of the Payment Summary Assistant in your software. You can enter a description for the allowance, such as "Travel", and select the applicable wage category as shown in the following example.
