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
On the New Custom Item screen mentioned above, select the type of item you’d like to create. You’ll then give it a Name and select an Input Type
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:
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
Once you’ve named your item, you will also need to 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 are applicable 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
- A different rate can also be specified for each employee by checking the relevant box
- % 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
In addition to these additional inputs for income items, there are also further inputs for income and allowance items with the Input Type of “Hourly rate * factor * hours” and “Custom rate * quantity”.
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:
This checkbox is available for custom income items and allows you to specify whether the income should be taxed annually i.e. it is not included in the annual equivalent calculation when determining PAYE. This is generally applicable to annual bonuses or other incomes that are 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 / 3 months of this type of income will be added up and divided by the total number of hours in 13 weeks / 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:
This checkbox 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:
This checkbox is available for custom deduction items and 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 the following help article:
For more information on Remuneration for ETI, please see the following help article:
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:
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:
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 custom Name and select the System Item to Copy. The following system items can be cloned currently:
- Once-off Commission
- Employer Loans
- Maintenance Orders
- Provident Fund
- Subsistence Allowance Local
- Subsistence Allowance International
- Travel Allowance
Once you’ve created the item, you have the option to Customise the payslip labels – it will default to <Item Cloned> (<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.
Custom Item Names
Irrespective of which of the above methods you’re using, your item will need a Name.
We recommend that you make 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.