How to create an employee allowance

How to reimburse employees for their expenses or cost of doing business for the company in Sage 50 Accounting.

Non-taxable employee allowance

 NOTE: A non-taxable allowance won't affect the gross pay and T4. 

1. Go to Setup, Settings, Payroll, Incomes.
2. Create a new income.
3. Change the income type to Reimbursement.
4. Go to Linked Accounts, Incomes.
5. Select an expense account.
6. Enable on Employee Records.
7. Create a paycheque.
8. Reimbursements show up on the Other Amounts section (right) of the Paycheque.

Taxable employee allowance

 NOTE: A taxable allowance affects the gross pay, the bank account, and shows on T4. 

1. Go to Setup, Settings, Payroll, Incomes.
2. Create a new income.
3. Verify the appropriate tax deduction set for the allowance.
4. Check or uncheck the necessary tax types on the income list.
5. Set the Calculate Vacation column based on the chart below:

   Vacationable Earnings

   Earning Type

   BC

   AB

   SK

   MB

   ON

   QC

   NB

   PE

   NS

   NL

   YK

   NT

   NU

   Car

   N

   N

   N

   N

   N

   **

   N

   N

   N

   N

   N

   N

   N

   Clothing

   N

   N

   N

   N

   N

   **

   N

   N

   N

   N

   N

   N

   N

   Housing

   N

   N

   N

   N

   Y

   **

   N

   N

   N

   N

   N

   N

   N

   Meal

   N

   N

   N

   N

   N

   **

   N

   N

   N

   N

   N

   N

   N

   Moving

   N

   N

   N

   N

   N

   **

   N

   N

   N

   N

   N

   N

   N

   Tool

   N

   N

   N

   N

   N

   **

   N

   N

   N

   N

   N

   N

   N

   Travel

   N

   N

   N

   N

   N

   **

   N

   N

   N

   N

   N

   N

   N

   ** classifies as vacationable under certain conditions. Check with your accountant.

6. Income type remains at Income.
7. Go to Linked Accounts, Incomes.
8. Select an expense account.
9. Enable on Employee Records.
10. Create a paycheque.
11. Allowances show up on the Earnings side (left) of the Paycheque.