1. Accessing Allowance Configuration #

1. Log in to your payroll system with an account that has admin or HR permissions.

2. Go to:
   Configuration → Types → Allowance Types

3. Click Add New Allowance or Edit an existing one.

---

2. Allowance Details Setup #

When adding or editing an allowance, you will be required to fill in the following fields:

a. Allowance Name #

• Enter the display name for the allowance (e.g., “Transport Allowance”, “Meal Allowance”, “Commission”).

b. Special Types #

• Types used for reporting IR8A purpose

---

3. Contribution & Tax Configuration #

Each allowance has options to define whether it contributes to CPF, SDL

a. Contribute to CPF #

• Yes → Allowance amount will be included in CPF Ordinary Wage (OW) or Additional Wage (AW) depending on your category selection.

• No → Allowance will not be used in CPF calculations.

b. Contribute to SDL (Skills Development Levy) #

• Yes → Allowance is added to the total salary amount used to calculate SDL.

• No → SDL will not be charged on this allowance.

---

4. Allowance Category: Ordinary vs Additional #

You must select the correct classification for CPF rules and payroll processing.

a. Ordinary Allowance (OW) #

Choose Ordinary Allowance if:

• It is paid monthly or regularly

• It is predictable and recurring
  Examples:

• Transport allowance

• Meal allowance

• Mobile allowance

• Fixed monthly commission

These are included in CPF Ordinary Wages for the month.

---

b. Additional Allowance (AW) #

Choose Additional Allowance if it is:

• Not paid monthly

• Irregular, ad-hoc, or performance-based
  Examples:

• Annual bonus

• One-time allowance

• Incentives

• Year-end payments

These are included in CPF Additional Wages (AW), subject to AW ceiling rules.

---

5. Save Configuration #

After selecting all relevant options:

1. Click Save or Update.

2. The allowance will now appear as an option when preparing monthly payroll.

---

6. Using Allowances During Payroll #

When processing payroll:

• Select the configured allowance from the Allowances section.

• Enter the amount for each employee.

• The system will automatically apply CPF, SDL and wage type rules based on your configuration.

Configuring Deduction Types in the Payroll System #

This guide helps HR and payroll administrators set up Deduction Types.

1. What Are Deduction Types? #

Deduction Types allow you to define specific amounts that should be deducted from an employee’s salary.
These may include:

• Loan repayment

• Late coming penalties

• SHG Funds (preset up by system)

The system uses these predefined types to ensure consistent and accurate salary calculations.

---

2. Accessing Deduction Configuration #

1. Log in with your HR/Admin credentials.

2. Navigate to:
   Configuration → Types → Deduction Types

3. Click Add New Deduction or Edit an existing type.

---

3. Deduction Details Setup #

When creating or editing a deduction, the following fields must be configured:

---

a. Deduction Name #

• The display name (e.g., “Unpaid Leave”, “Loan Repayment”, “Late Penalty”).

---

b. Special type #

• Types used for IR8A purpose

---

c. Deduction Category #

Select the category that best describes the deduction:

1.  Loan #

• Deducts a fixed or reducing balance amount each month.

2. Penalty #

• For disciplinary or policy-related deductions (e.g., late coming fines).

4. Others #

• Any custom deduction not covered above.

---

4. Contribution & Tax Configuration #

Some deductions may affect taxable income or CPF reporting.

a. Affect CPF Contribution #

• Yes → Deduction reduces Ordinary Wage (OW) amount before CPF calculation.

• No → Deduction does not change CPF wages.

Examples that do NOT affect CPF:

• Loan repayment

• Donations

• One-time penalties