• Claiming GST credits on reimbursements to volunteers

    A not-for-profit organisation must be registered for GST to claim GST credits on reimbursements to its volunteers.

    Generally, an organisation cannot claim GST credits when it reimburses a volunteer for expenses they have incurred in carrying out their activities for the organisation. However, there are three exceptions.

    Examples: Not entitled to claim

    A sporting club reimburses a volunteer coach for petrol costs incurred in travelling to training sessions and matches. The sporting club cannot claim any GST credits for the GST included in the price of the petrol.

    A volunteer member of a service club decides to buy stationery for the club because their stocks are running low. The member pays for the stationery and is reimbursed by the club. The club is not entitled to claim GST credits for the GST in the price of the stationery.

    End of example

    Exceptions

    1. If an organisation is an endorsed charity, a gift-deductible entity or a government school, it is entitled to claim GST credits when it reimburses a volunteer for expenses directly related to the volunteer’s activities for the organisation.

    Examples: Exception 1 - entitled to claim

    A volunteer of a charity which operates a crisis centre, phones many people from her home. The charity reimburses the volunteer for phone expenses relating to her work for the centre. The charity is entitled to claim a GST credit for the GST included in the price of the calls.

    A volunteer counsellor for a charity attends a training session on conflict resolution. The charity reimburses the volunteer for the cost of the session. The charity is entitled to claim a GST credit for the GST included in the cost of the session.

    A volunteer for a charity that runs a support group buys soft drink and biscuits for the meetings of the group. The charity reimburses the volunteer for the expense. The charity is entitled to claim GST credits for any GST in the price of the soft drink and biscuits.

    End of example
    1. A volunteer acts as a not-for-profit organisation’s agent when incurring an expense. The organisation is entitled to claim GST credits for expenses incurred by a volunteer authorised to incur those expenses on its behalf.

    Example: Exception 2 - entitled to claim

    A bushwalking club authorises its social secretary to hire a hall for the club’s annual general meeting. The social secretary pays for the hire of the hall. The club reimburses the social secretary for this expense. Provided the social secretary booked the hall in the name of the club (and the club rather than the social secretary is bound by the hire agreement with the owners of the hall), then the club will be entitled to claim GST credits for the GST in the price of the hall hire.

    End of example
    1. The volunteer is an officer of an organisation. The organisation can claim GST credits when reimbursing an officer for expenses directly related to their activities as an officer. This includes a director, secretary or an executive officer.

    Example: Exception 3 - entitled to claim

    The voluntary secretary of the Lawnmowers’ Association of South Australia attends an interstate conference on the latest lawnmower technology. The association reimburses the secretary for her travel expenses in attending the conference. The association is entitled to claim GST credits for the GST included in the costs of her travel.

    End of example

    Reimbursement or allowance?

    Reimbursements are treated differently to allowances for purposes of claiming GST credits. If an organisation meets one of the three exceptions, it can claim a GST credit if it reimburses the volunteer. If the organisation pays that volunteer an allowance, it cannot claim a GST credit.

    Examples

    Aiko is a volunteer of a charity. Aiko picked up and paid for a stationery order for the charity. The stationery cost $100 and Aiko used approximately $20 worth of petrol. Aiko provided the receipt for the stationery to the charity and is compensated exactly for the cost of the stationery. This amount is a reimbursement. The charity is entitled to claim input tax credits for the GST included in the cost of the stationery. Aiko also received $50 for the cost of the trip and was not required to return any unspent money. This amount is an allowance.

    Volunteers of a charity are provided with an allowance of $100 per year for petrol expenses. The volunteer is paid this amount even if they spend more, or less, than this amount on petrol. The charity will not be entitled to claim a GST credit on the amount provided to each volunteer.

    End of example

    See also:

    Last modified: 20 Jul 2015QC 46366