Entity A and Entity B agreed to share equally the cost of repairing a tool owned by Entity A. Both entities are registered for GST. The invoice was issued to Entity A, and Entity B will reimburse Entity A over the course of a year. In this scenario, can Entity B claim half of the GST, given that they are effectively paying half the cost?
Why not? The repair invoice is addressed to A. So what is B paying for? You can clear things up by having Entity A make a tax invoice to give to Entity B, for the amounts that needed to be reimbursed.
That sounds fine to do. So entity A pays the repair invoice and claims the GST and pays the GST on amounts from Entity B. Entity B would claim GST when paying A.
The reimbursement will be offset against sales invoices that Entity A owes to Entity B. In this case, is Entity B still eligible to claim GST?
As your company has not made a taxable supply to the the other company that has re-imbursed your company they can not claim the GST because its not a taxable supply to them and accordingly its not a creditable acquisition for them. A taxable supply must be made to a party in order for them to claim GST. Also you can not charge GST on a supply that you have not made.
A 'creditable acquisition' is defined in Section 11-5 of the GST legislation as follows:
You make a creditable acquisition if:
(a) you acquire anything solely or partly for a creditable purpose; and
(b) the supply of the thing to you is a taxable supply; and
(c) you provide, or are liable to provide, consideration for the supply; and
(d) you are registered, or required to be registered.
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15 Apr 2026 · 4 min read time
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