GST on Recovering Expenses (Re-billing)
A client called me today on a Sunday morning, asked me about the validity of his vendor charging him GST on an reimbursement the latter paid on behalf.
I did a quick reply to him, which he was very thankful.
Just hope to share with the group here too, I believe some of you may be facing same doubt too, hope my sharing helps…
Here it goes….
The GST treatment for the recovery of expenses from another party such as your employees, customers, related corporations or suppliers, depends on whether the expenses are incurred by you as a principal or as an agent.
For the purpose of GST, the term “reimbursement” refers to the recovery of an expense that you incur as a principal from another party.
A reimbursement may be subject to GST if it is consideration for a supply of goods or services.
On the other hand, the recovery of a payment made on behalf of another party by you as an agent is termed as a “disbursement”.
A disbursement does not constitute a supply and hence, is not subject to GST.
Not rocket science. Hope this tip helps you deal with your vendor better.
If you need help, feel free to contact us at :
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