How can I create a payroll type for Clergy Residence amount in QBO? It much be insurable but not pensionable or taxable. I can't find how to make a custom pay type.

Hi, Craig. Currently, this pay type is unavailable since QuickBooks Online (QBO) Payroll Canada pay types can only be taxable, pensionable and insurable or none at all.

You can create a payroll item labeled Clergy Residence Allowance under Other Earnings. By default, QBO will calculate tax, CPP, and EI, but you can manually override those figures during your payroll run:

1. Click on All apps.
2. Go to Payroll and select Run Payroll.
3. On the payroll screen, find the employee and click the three-dot icon (⋮) in the Actions column.
4. Select Edit paycheque.
5. Manually adjust/reduce the Income Tax and CPP amounts under both the Employee and Employer tax sections.
6. Review the totals and finish your payroll run.

Alternatively, you could use a Reimbursement item instead. This is much faster because it’s automatically tax and CPP exempt, but the downside is that it won't count as insurable earnings.

If you decide to go this route, I'd suggest chatting with our live support team first to make sure your Year-to-Date (YTD) amounts stay accurate.

Let me know if you have any other questions. I'm happy to help.