• Employee reimbursements and GST

    Attention

    Terms we use

    When we say:

    • GST credits, we are referring to the GST term input tax credits
    • purchases, we are referring to the GST term acquisitions
    • sales, we are referring to the GST term supplies.
    End of attention

    If you are an employer who is registered for GST, you may be entitled to GST credits for payments you make to reimburse your employees (and their associates) for their expenses.

    You can claim GST credits if you have relevant documents, such as receipts or tax invoices that were issued to your employee, and if the payments meet the requirements of the GST legislation. Your employee should provide these documents to you to substantiate their claims for reimbursement.

    GST credits for employee reimbursements

    If you are registered for GST, you are entitled to a GST credit for an employee-reimbursed expense if you meet all of the following criteria:

    • your employee's expense is directly related to their activities as your employee or the reimbursement is an expense payment benefit
    • the sale of the item purchased by your employee was taxable
    • your employee is not entitled to a GST credit for the expense.

    If you are entitled to a GST credit, you can claim it in your activity statement once your employee gives you a tax invoice or receipt for the expense.

    Attention

    You can receive an expense payment benefit when:

    • you make a payment to another person, in whole or in part, of an amount of money spent by your employee as part of their employment with you
    • you reimburse another person, in whole or in part, an amount of money spent by your employee as part of their employment with you.

    You need to have a tax invoice if the expense is more than $82.50 (GST inclusive).

    End of attention

    You are not entitled to a GST credit if:

    • you reimburse non-deductible expenses, such as the portion of expenses relating to entertaining clients (non-deductible expenses are expenses that you incur as part of running your business that cannot be deducted from your income to calculate your taxable income)
    • you reimburse expenses that relate to input taxed sales that you make in the running of your business and you exceed the financial purchases threshold (if you exceed this threshold you may only be entitled to a reduced GST credit on certain specific purchases)
    • you pay your employee an allowance (see Allowances).
    • Last modified: 29 Jun 2012QC 16704