Employers may be entitled to claim GST input tax credits for payments they have made to reimburse employees for expenses that are directly related to their business activities.
A ‘reimbursement’ is provided when a taxpayer pays their employee the amount, or part of the amount, of a particular work-related purchase they make.
Employers are not entitled to a GST input tax credit if they pay their employee an allowance, or make a payment based on a notional expense, such as a cents-per-kilometre payment, travel or meal allowance.
An ‘allowance’ is provided when a taxpayer pays their employee an amount for an estimated expense without requiring them to repay any excess.
Taxpayers are expected to hold sufficient evidence to substantiate their claim, such as a tax invoice for the purchase that is being reimbursed.
