Note: The steps in creating Allowance is same for creating Deduction.

Step 1, 2 & 3: Go to Payroll -> Allowance and Deduction Setting -> Allowance Setting, You can follow picture 2 to create Deduction and follow the steps onward. 

Picture 2:

Step 4: click 'Create' button.

Step 5: Enter the Code, or any initial that you want to represent the new Allowance Type in the 'Code' column. Then key in a longer description of the new Allowance Type in the 'Description' column. A simple example as below: 

Code: MA 

Description: Meal Allowance 

Regarding the 'Update Historical Transactions', this is not relevant for creating a new Allowance. However, if you are editing an existing Allowance, if you tick the box of 'Update Historical Transactions', then all of the payment of the respective Allowance will be updated accordingly. For example, if you are editing an existing Allowance of 'Travel Allowance', let's say you change it to 'Daily Travel Allowance' and you choose to tick the 'Update Historical Transactions', then all of the historical record of 'Travel Allowance' in the system will be changed to 'Daily Travel Allowance' accordingly. 

Step 6: You need to decide whether the new Allowance Type that you are creating here is payable to the respective wages. For example, if you tick 'EPF' then this allowance still be included in the calculation of EPF wages, in other words, both Employee and Employer will need to contribute the respective percentage of this Allowance Type to EPF. Definition of other options: 

EPF: Employee Provident Fund, a compulsory saving and social security fund in Malaysia

SOCSO: a compulsory social security insurance for workers in Malaysia 

Tax: monthly deduction of personal income tax for workers in Malaysia 

HRDF: meant for Human Resources Development Fund in Malaysia or any other similar fund in other countries

Baitulmaal: Available for Muslim.

Step 7: Similar with the above, this table is for you to decide whether the new Allowance Type will be included in the calculation of those in the table, ie None Pay Leave (NPL), Overtime Rate, etc. If you tick the box, this allowance will be used and included in the calculation. 

In this column, there a factor to consider here, namely: 

• Is this Allowance Type included in the calculation of NPL, Daily Rate, Overtime and Deduction Rate?  
  

If the new Allowance Type that you are creating here is fixed Allowance, then this column is not applicable here. This column is only applicable for non Fixed Allowance. 

If this Allowance Type is NOT included in NPL, Daily Rate, Overtime or Deduction Rate, then this column is not applicable here.

Step 8: This column allows you to further define this Allowance to a certain type. 

• Bonus in report: this is only for the reporting downloaded from the system. Ticking this box means you want the system to include this Allowance as Bonus and show it in the report 
  
• Others in Payslip: to include or combine this Allowance with other income/wages in payslip (choose from the drop down list) 
  

Step 9: This table is for Fix allowance. If the Allowance type has fix None Pay Leave (NPL), fix Overtime Rate, etc. tick the box which is applicable.

Step 10: This is only for Accounting software use. 

Step 11: Click 'Save' and you have just created a new Allowance Type.