Accommodation Allowances

If your employee receives accommodation provided by you as part of their employment, it will need to be accounted for in their pay so that it is taxed correctly. This can be managed by creating the following two pay items under Manage > Pay Items. 

Important: Some behind the scene settings are required to complete the setup, so once you've created the two Pay Items below please get in touch with PayHero Support at support@payhero.co.nz so that we can complete the setup for you. 

Pay Item - Accommodation Allowance 

The first Pay Item you'll require should be set as an Other Earnings type. You can do this from Manage > Pay Items > Earnings and set it up similar to the following:

Units - Select $.

Rate Type - This should be set to a Fixed rate type if all employees receive the same value of accommodation, or Variable if employees have differing values.

Fixed Rate - If you have a flat rate for all employees enter the value here. 

Pay Item - Accommodation Deduction

The second Pay Item you'll require is a Regular Deduction type set up similar to the following:

Rate Type - The rate type should be set to Fixed if all employees receive the same value of accommodation, or Variable if employees have differing values.

Fixed Rate - If you have a flat rate for all employees enter the value here.

Once you've set up the pay items don't forget to contact support@payhero.co.nz to have the appropriate background settings applied to those pay items. 

Default Pay Settings

These accommodation pay items will need to be included in the employee's Default Pay. You can do this from Manage > Employees, selecting the relevant employee and clicking on their Default Pay tab.

Under earnings include the Accommodation Allowance pay item you just created.

Under deductions add the Accommodation deduction pay item you set up.

If the accommodation rate is different for this employee you can specify it here. 

Effect on Leave Rates

The Holidays Act (sections 8(1)(b)(iii) and 10) specifies that the "cash value of board or lodgings" is included in gross earnings for leave calculations. That means that when an employee takes leave that is paid out at rates calculated using gross earnings, paying the accommodation allowance as well could result in double-dipping. The payment of the accommodation allowance has been built into the leave rate so to pay the standard accommodation allowance essentially means the employee is being paid the accommodation allowance twice for the leave days.

In these situations it is worth considering reducing the accommodation allowance by editing the amount in the pay.