Answer
Allowances in New Zealand payroll work differently from Australian allowances in one important respect: there is no STP itemisation or Payday Filing equivalent. IRD Employment Information does not receive separately itemised allowance lines. You simply need to decide whether each allowance is taxable (subject to PAYE) or non-taxable.
Setting Up Allowances in the Desktop App
There are two places to create allowances:
- Employee-specific allowances — go to Employees >> Allowances & Deductions >> Allowances and use the green plus icon to add an allowance for that employee only.
- Company-wide allowances — go to Company >> Allowances to define allowances shared across multiple employees, then assign employees to each one.
When adding or editing an allowance you will see the following fields:
- Description — a short name that appears on payslips and reports (maximum 40 characters).
- Amount — the default dollar amount per pay (or per unit if units are used).
- Taxable? — tick this if the allowance is subject to PAYE. Most allowances — such as tool allowances, living away from home, and meal allowances that exceed IRD’s tax-free thresholds — are taxable. Reimbursements of actual expenses are typically non-taxable.
- Automatically Add To Pending Pays? — tick this to have the allowance added to each new pay automatically for the employee.
The Included in KiwiSaver / Super Calculations field does not appear for New Zealand companies because allowances do not directly affect KiwiSaver deduction calculations in the same way they affect Australian superannuation.
Setting Up Allowances in the Online (Web/Mobile) App
In the online app, allowances for New Zealand employees are managed only at the company level. The employee-level Allowances tab is not available for New Zealand companies in the online app. To set up shared allowances, go to Company >> Allowances. You can set a description, amount, whether it is taxable, and which employees receive it. Once a company allowance is assigned to an employee, it will be available to add to that employee’s pays.
Adding Allowances to a Pay
When editing a pay in either the desktop or online app, open the Allowances/Deductions section of the pay. Select the allowance from the list of allowances already set up for that employee. For each allowance you can adjust the amount and the number of units for that pay period. The taxable flag carried over from the allowance setup determines whether PAYE is withheld on the amount.
Editing Past Pay Allowances in Bulk
If you need to update allowances across a range of completed pays, use the Retrospective Tool under the Tools menu in the desktop app, or via Tools >> Retrospective Tool in the online app. This lets you modify allowance amounts across a date range without deleting and re-entering individual pays.
For general information on entering allowances, see How Do I Enter Allowances?
