You can find Allowance Maintenance from Setups, Payroll, Allowances, Maintain, and Deduction Maintenance from Setups, Payroll, Deductions, Maintain.
Both the Allowance Code Details and Deduction Code Details tabs have a Tax Status field to select Before Tax or After Tax.
The differences between the two settings are explained in the sections below.
B = Before Tax
Select Before Tax if the allowance or deduction is to be taxed.
Allowances before tax are included in the employee's taxable pay. These allowances usually represent some form of additional pay as
compensation for working conditions or for special skills.Taxable allowances are usually included in the Gross Salary Column on the Tax Certificate/PAYE Deduction Certificate.
Allowance examples:
Uniform Allowance.
First Aid Allowance.
Leading Hand Allowance.
Site Allowance.
Deduction examples:
FBT.
Salary Sacrifice Super.
📌Note: It is not possible to change the Tax Status of an allowance or a deduction after a pay which uses the allowance or deduction has been run in the financial year. If you want to change the Tax Status, create a new allowance or deduction with the required Tax Status and use it in place of the existing allowance or deduction.
A = After Tax
Select After Tax if the allowance or deduction is not to be taxed.
Allowances and Deductions after tax are included in the employee's gross pay but are not included in their taxable pay. These allowances and deductions usually represent expenses that could be claimed by the employee as tax deductions.
Allowance examples:
Car Allowance.
Overtime Meal Allowance.
Living Away from Home Allowance.
Deduction examples:
Loan payments.
Health Insurance.