How do I claim back the GST on employee reimbursements?

This question arises when you reimburse an employee for out-of-pocket expenses and you want to claim back the GST on the expense. Although there’s no place to record GST on an employee’s pay, you can still claim GST by using a clearing account.

First, go to your Payroll Categories list, click the Wages tab and click New. As the Wages Name, type ‘Reimbursements inc GST’. Click the Optional Account button and as the Override Account, select your Petty Cash account (this should be an asset account, with Bank as the Account Type). Click Employee to mark off all employees who receive reimbursements and click Exempt to make this reimbursement category exempt from PAYG tax.

Now process the employee’s pay, entering the amount of their reimbursement against the ‘Reimbursement inc GST’ wages category. Immediately after recording their pay, head to Spend Money and record the reimbursement as if you were paying for the expense yourself, selecting GST as the tax code if appropriate. However, remember to select Petty Cash as the bank account in the top left corner.

That’s all there is to it. The employee’s pay shows the reimbursement at the correct amount; the expense shows up in your Profit & Loss correctly; the GST shows up on your Business Activity Statement and the two entries in your Petty Cash account cancel each other out.

The contents from this page are taken from the MYOB Payroll eBook series, by Veechi Curtis, available online for only $9.95 each.

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