Compensation payments for hurt or humiliation in New Zealand, in some circumstances, are not included in Taxable Income and the amount paid is excluded from Pay Day Filing. Before entering a transaction, you should check whether the payment is considered part of Taxable Income or not.
For more information, refer to the Inland Revenue Department (IRD) or other government agencies. Some useful links on the topic are listed below as a starting point:
If the payment you need to make is not considered Taxable Income, you would use an Addition after Tax.
To set up the Addition After Tax:
Go to Payroll, Maintenance, General, Additions and Deductions.
Click Add.
Enter a Code, Shortcut Key and Description.
Select Addition After Tax as the Category.
For Type, select Amount.
Set the other parameters as per your requirements.
Click OK to save.
The Addition After Tax can be used to make payments via Timesheets, Manual Calculation or Termination transactions.