Custom Items

SimplePay provides a number of regular and once-off system items, and we strongly advise you to use these wherever possible as they often have special tax treatment and/or reporting requirements.

However, if you do need to create a custom item, you can do so by going to Settings > Custom Items > Add, where you will have two options for creating new items:

• A completely new item, customised to your specific needs; or
• An item that functions the same way as a specific system item but with a custom name.

Completely New Custom Items

Once you have clicked Add, select the type of item you’d like to create. Then, give it a Name and select an Input Type.

Note

To ensure clarity and avoid any potential confusion in the viewing of payslips or generated reports, it is crucial to choose names that are unique. Also see this note.

All custom items will use the general SARS code and have the default tax treatment of that type. For more information on these aspects, please see the following article:

• Payslip Components

Custom Item Type

The first step in creating a new custom item is to select the relevant item type:

• Income – remuneration for services rendered, in addition to salaries
• Deduction – amounts deducted from employees’ pay
• Allowance – payments made that are required for employees to do their job; note that all custom allowances will be taxable
• Benefit – taxable extra goods and services provided by the employer
• Employer Contribution – contributions that are not taxable as fringe benefits; not common
• Reimbursement – to reimburse employees for business expenses incurred; note that all reimbursements are non-taxable but that documentary proof might be required

Input Type

Once you’ve named your item, you must select an Input Type, which tells the system how the item will be added to and used on payslips. The following options are available, but not all apply to every item type:

• "Fixed amount" – regular item, which will always have the same amount, irrespective of period or employee
• "Enter Amount Per Employee" – regular item, which will be different for each employee
• "Different on every payslip" – regular item, which will be different for each employee for each period; the amount will be entered under Payslip Inputs each month
• "Once-off for specified payslips" – once-off item
• "Hourly rate * factor * hours" – regular item, which will calculate an amount based on the hourly rate calculated by SimplePay, the factor entered here and the hours entered each month under Payslip Inputs
• "Custom rate * quantity" – regular item, which will calculate the amount based on the rate entered here and the quantity entered under Payslip Inputs
• "% of income" – regular item, which calculates the amount based on the percentage entered here and the relevant employee’s income for the period
• "Formula" – allows you to create custom formulas. For more information, go to our help page here
• "Monthly (for non-monthly employees)" – regular item, which will be taken into account once a month (on the first payslip) for weekly, fortnightly and twice a month employees

There are further inputs for custom items with the Input Type of “Hourly rate * factor * hours” or “Custom rate * quantity”.

Rate factor

If you select the Input Type “Hourly rate * factor * hours”, you will be required to enter the Rate factor. This is the factor by which the Hourly Rate under Basic Salary must be adjusted for the custom item's calculation. Please see the example below:

Let's assume the following:

• Your employee is paid R100 an hour.
• You set up a custom income item with "1.5" as the Rate factor.
• The Hours worked factor is "1" (more information below).
• You enter 10 hours worked on the payslip.

The system will calculate the hourly rate as 100 x 1.5 = 150, and then multiply that by the hours worked (150 × (10 × 1) = 1 500). Therefore, the custom income item will show R1 500 on the payslip.

Note

We use the Rate factor to adjust the rate – rather than changing the Hourly Rate under Basic Salary – because the Hourly Rate will be used in other calculations, too. The Hourly Rate under Basic Salary should always remain the employee's standard hourly rate.

Hours worked factor

If you create custom income and allowance items and select the Input Type as “Hourly rate * factor * hours” or “Custom rate * quantity”, you can also enter the Hours worked factor.

As indicated on the screen, the Hours worked factor should be entered as 1 for most cases. This input basically tells the system how many hours the quantity entered represents. This is relevant to calculate the number of hours for ETI purposes, and for leave accrual based on the number of hours worked.

• For example, if you set up a custom item to record Sunday hours, you’d enter 1 as the Hours worked factor. The system will then see anything input for that item as hours. Therefore, if you entered 7 as the payslip input for this custom item, that would count as 7 x 1 = 7 hours for ETI and leave accrual purposes.
• However, if the custom item is being used to pay employees a daily rate, for example, the Hours worked factor should equal the number of hours the employee works in a day, e.g. 8. If they entered 3 (days) as the payslip input for this custom item, the system would add 3 x 8 = 24 hours to their hours for ETI and leave accrual purposes.
• Some items should have 0 as the Hours worked factor. An example would be a Night Shift Allowance, where the employees are already paid for those hours worked as part of their normal hours. In other words, having the Hours worked factor as 0 would prevent these hours from being double-counted for ETI and leave accrual purposes.

More information about leave accrual based on hours worked can be found in the following article:

• Creating Entitlement Policies

Custom rate

If you select “Custom rate * quantity” as the Input Type, you will be required to enter the Custom rate. This is the hourly rate at which this specific item should be calculated, and it is independent from the Hourly Rate under Basic Salary.

If you would like a Custom rate per employee, you can tick the Different rate for every employee box. This will prompt you to enter the Custom rate when adding the custom item to a payslip.

Additional Inputs

Enable Pro-Rata

When selecting “Fixed Amount” or “Enter Amount Per Employee” as the Input Type for Income, Allowance or Deduction custom items, the Enable Pro-Rata checkbox appears. Selecting this checkbox means that this custom item will be pro-rated on payslips where an employee did not work a full pay period, e.g. the employee was appointed or terminated during the pay period.

More information on pro-rata calculations can be found in the following article:

• How does the pro-rata calculation work?

Taxed Annually (Irregular Income)

This checkbox is available only for custom income items. It allows you to specify whether the income should be taxed annually; if this is the case, it will not be included in the annual equivalent calculation when determining PAYE. This generally applies to annual bonuses or other incomes paid irregularly and not tied to a specific period that the employee worked. More information on which payments are taxed annually can be found in the SARS Guide for Employers in Respect of Employees’ Tax.

Include in Fluctuating Leave Rate

This checkbox is available for custom income items and allows you to specify that the income must be included when calculating the additional rate for annual leave, as per the BCEA. This means that the last 13 weeks or 3 months of this type of income will be added up and divided by the total number of hours in 13 weeks or 3 months, which results in an extra leave rate over and above the employee’s normal hourly rate. More information on this requirement can be found in the following article:

• Leave Pay

Overtime

This option is available only for custom income items. Before 2020, SARS stipulated that overtime should be reported under the same code as income (3601). From the 2020 tax year, overtime is reported separately – under code 3607. Therefore, if the custom item you are creating pertains to an overtime payment, please ensure that you tick this box.

Affects Wage for ETI Purposes

This box should be ticked if the particular income or allowance item should be taken into account when determining the Qualifying Wage for ETI purposes.

Please see the following article for a comprehensive discussion on this:

• Qualifying Wage

BCEA deduction (Do not deduct from ETI Remuneration)

This checkbox is available for custom deduction items; it should be ticked when the custom deduction qualifies as a “BCEA deduction” and should be included in the calculation of ETI Remuneration.

For more information on ETI management on SimplePay, please see:

• ETI Management on SimplePay

For more information on Remuneration for ETI, please see:

• Calculating ETI

Link to beneficiary?

If your custom item is set up as a deduction, benefit or employer contribution item, you can link the custom item to beneficiaries. By doing this, any amounts for this custom item that appear on payslips will be included in the Beneficiaries report after creating a pay run. If you’ve set up custom beneficiaries, you can specify that this custom item has a beneficiary by clicking Link to beneficiary?. You’ll then need to select the Beneficiary type:

• "Fixed" should be selected if there is only one beneficiary for this custom item for all employees. You will then need to select the beneficiary from the dropdown list.
• "Different on every employee" should be selected if different employees have different beneficiaries for this custom item. If you select this option, the beneficiary will need to be specified when adding the custom item to the employee’s payslip.

For more information on beneficiaries, refer to the following article:

• Beneficiaries

Exclude from Accounting

When you are setting up a custom benefit item, the Exclude from Accounting checkbox appears. Checking this box means this custom item will not show in any accounting integration or accounting reports.

Bargaining Council Item

When you are setting up a custom benefit item, the Bargaining Council Item checkbox appears. This ensures that the custom item is reported under the specific tax codes SARS has prescribed for the taxable benefit from bargaining council employer contributions. If your employees are not associated with a bargaining council, leave this unticked.

Employment Equity Reporting

If you have any income, benefit, or employer contribution custom items, and you will be using our employment equity reporting function, you must complete the Employment Equity Reporting field on the custom item setup page, by selecting one of the following from the dropdown menu:

• "Not Applicable": Select this option to exclude the custom item from equity reporting. The items below are excluded from equity reporting, as set out in the Employment Equity Act.

  • Any allowance, cash payment or payment in kind provided to enable the employee for work (e.g. an equipment, tool or similar allowance, or the provision of transport, or the payment of a transport allowance to enable the employee to travel to and from work).
  • Gratuities (e.g. tips received from customers), and gifts from the employer.
  • Non-employment related lump sums such as severance pay.
  • Dividends not included as remuneration by the Fourth Schedule to the Income Tax Act.

• "Fixed Remuneration": Select this option if the custom item is considered a guaranteed remuneration type. Fixed remuneration is pre-determined, non-discretionary, and not dependant on an individual's performance. Examples include basic salary, medical aid benefit, pension fund benefit, and a travel allowance.

• "Variable Remuneration": Select this option if the custom item is incentive-based, is made irregularly, is discretionary in nature, or is paid regularly but the value fluctuates. Examples include back pay, commission, performance bonuses, share schemes, retention bonuses, and dividends.

For more information on employment equity reporting, please see the help page below:

• Employment Equity Reporting on SimplePay

Custom Items based on System Items

This option allows you to leverage the functionality of an existing item and/or its reporting rules while also having multiple, uniquely named options.

On the Custom Items screen mentioned above, click on create a copy of an existing system item.

You can then give it a unique custom Name, and select the System Item to Copy. The following system items can be cloned currently:

• Commission
• Once-off Commission
• Employer Loans
• Garnishees
• Maintenance Orders
• Savings
• Provident Fund
• Subsistence Allowance Local
• Subsistence Allowance International
• Travel Allowance

Once you’ve created the item, you have the option to Customise payslip labels – it will default to "Item Cloned (Custom Name)", e.g. Commission (Custom Commission Name).

You can then click Save, and simply add it to your payslips in the same way you’d add the default system item.

Managing Custom Items

You are able to delete a custom item in the event it was created in error or will no longer be in use. To do so, select the custom item, and click Delete at the bottom of the page.

Deleted custom items can also be reactivated if required. Navigate to Settings > Custom Items, and click on Inactive. Select the custom item, and click Activate.

Note

You cannot reactivate a custom item if it has the same name as a currently active item. You would need to rename either item in order to reactivate.

Custom Item Names

Irrespective of which of the above methods you’re using, your item will need a Name. It is important to choose names that are unique and distinctive.

Tip

We recommend that you make the name as generic as possible so that it can be used for all employees. For example, “Telephone Allowance” is a better name than “John’s Telephone Allowance – November 2016”. This allows you to keep your custom items list short and your payroll simple.