An allowance is a taxable payment to an employee that's separate from regular wages. It's typically paid with each payroll to cover job-related costs, such as uniforms or auto usage, and is taxable because it's not dependent upon actual receipts.
|Note: Allowance amounts are not included in the pay base for calculation of percentage-driven deductions such as Registered Retirement Savings Plan (RRSP) amounts.|
Using QuickBooks Online Advanced Payroll powered by Wagepoint? Click here.
Here’s how to add the allowance pay type for an employee:
- Go to Employees or Payroll menu.
- Select the employee from the list
- Select Edit employee.
- Under How much do you pay the employee, select the pencil icon.
- Select the Allowance checkbox. (Note: If the pay type is not in the Additional pay types list, click Even more ways to pay this employee to see more pay types, and select it from there.)
- Optionally, enter a default amount to be paid each pay cheque. You can always change this amount when you run payroll.
- Select Done.
The next time you create a pay cheque for the employee, the Allowance pay type appears in the Pay column.