You may want to have an automobile allowance benefit to compensate employees that must travel as a regular part of their job. A flat-rate automobile allowance is once option for paying an allowance like this and usually has a tax implication for the employee receiving it.
taxable as income for the employee because they are flat-rate,
included as income on the employees T-Slips,
automatically added to the first payroll of the month.
Add New Earning Code
Canadian Payroll > Employer Payroll Tables > Earnings Codes.
Open the Insert – Earnings Codes form to add a new
Earning Codeby pressing
The first thing to setup for any Earning Code is to create a unique Code identifier and enter the Full Name.
Full Namefor the Earning Code.
After settings up the Code and Full Name of the Earning Code we need to setup the Earning Data.
Earning Data Setup
Earning Data tab we will setup the benefit as a taxable benefit (we do this because the benefit is a flat-rate allowance). At this time we will also zero out the benefit rate to prevent the benefit being generated in error, as well as setup how frequently the benefit will be added to the payroll of employees.
Earning Datatab of the Earning Code settings.
Short Nameto use for the Earning Code.
% of Basic.
(This prevents earnings payed in error if the Earning Code is added to an employee without assigning a fixed-rate amount to it.)
Gen. Frequencydrop-down select
First Payment Of Month.
(This will ensure that the allowance is only paid once a month)
Caution:First Payment Of Month is calculated using the payment date (not the pay-period ending date), and behaves differently than First Pay-Period Of The Month (which is calculated using the pay period ending date).
Generate automatic earning - Salaried employee.
Generate automatic earning - Hourly employee.
Automobile flat-rate allowance earnings should be included with the employee’s income on their T-Slips. From the T-Slips tab you can select which box on the T-Slip to include the earnings with.
T-Slipstab from the Earning Code settings.
T4 Boxdrop-down select code
14 – Income.
(This will add the earnings for this earnings code to the income amount reported on the T4 form.)
RL1 Boxdrop-down select code
A - Employment income before srce ded.
(This will add the earnings for this earnings code to the income amount reported on the Revenu Quebec RL-1 form.)
Save Earning Code
Save the Earning Code by pressing
Add Automobile Allowance to Employee
The Earning Code for the flat-rate automobile allowance can be added to an employee from the Employee Profile. The Employee will receive an extra earning for the allowance with the first payment of the month.
Canadian Payroll > Employee Profile > Employee Profile.
Employeedrop-down select the employee to give a monthly automobile allowance.
(This will open the employee data in the Employee Profile.)
Earnings > Earning Codesfrom the Employee Profile menu on the left.
Insert – Earning Codeform to add the allowance Earning Code by pressing
Earning Codefor the automobile allowance.
Enter the flat-rate allowance amount into the
Caution:Rate will default to per Hours, but for a flat-rate allowance the flat-rate should be per Amount.
Add the automobile allowance to the Employee Profile by pressing