Do we charge our employee GST for reimbursement

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 · Accepted Answer

Matt_ATO · Answer

Howdy , When you invoice staff for additional costs incurred: - such as a more expensive flight or - extra hotel nights. The GST treatment depends on whether the expense is considered a reimbursement or an allowance. If you reimburse an employee for a work-related expense, and the expense is taxable. You can claim a GST credit. For example, if the employee requests a $500 flight instead of a $400 flight, the $100 difference would generally attract GST, provided the original expense was subject to GST. If you provide an allowance (a set amount given to the employee without requiring receipts), this is not considered a reimbursement, and you cannot claim a GST credit on it. In your example, if the $100 difference is: - reimbursed based on the actual cost incurred by the employee and - supported by a tax invoice, it would attract GST. Therefore, the $100 difference would be GST (taxable) (https://www.ato.gov.au/businesses-and-organisations/gst-excise-and-indirect-taxes/gst/in-detail/rules-for-specific-transactions/gst-and-employee-reimbursements).

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