Processing Staff Reimbursements - Harness GST Input Tax Credit For BAS Credits

Processing Staff Reimbursements Overview

With GST, it is necessary to record if applicable, the component of GST (Input Tax Credit) paid as a result of a staff reimbursement. This will allow for your organisation to claim the Input Tax Credit for this transaction within your BAS. This oes not apply to any wages or payroll/HR based transactions.

1. Periods & Taxes

The first change is visible from Utilities > Controls > Company Inquiry > Periods & Taxes page Taxes from the drop-down menu as shown below. 

2. General Ledger Inquiry

Next you will need to check the Tax Codes applied to the General Ledger within SapphireOne. A link to the General Ledgers is provided from within Payroll/HR mode so to access this go to Payroll/HR > Administration > General Ledger Inquiry. 

This feature is reliant on the correct Tax Code being applied to the applicable General Ledger account to ensure the correct BAS reporting. 

3. Allowance Inquiry

Next we will have to set up an allowance for it. To do this go to Payroll/HR > Administration > Allowance Inquiry. You are now able to enter a General Ledger Provision Account. If no Provision Account has been established, Payroll/HR officer will have to create the required General Journal and Cash Payment Journals.

If you do not wish to process Staff Reimbursements through Payroll/HR, do not enter the Provision GL but process these transactions within SapphireOne Accounts Payable.

When creating the required Provision Accounts you will need to consider the transactions and the Tax Codes that will apply within the BAS so you may process the transactions through SapphireOne Payroll/HR
The Tax Code applied to the General Ledger Provision Account will dictate where this transaction will be included within your BAS. You must also consider the analysis requirements applicable to the generation of your Management Reports. (See example below.) 

A Practical Example

The following Employee is to be paid a standard weekly pay, plus $22 Taxi fare. 

The Payrun will be processed as usual and it will only be on viewing the Journals created that you will identify a change within Payroll/HR. 

Journals Created

In the example above, we have paid an Employee Normal Hours, PAYG, a reimbursement for a Taxi Fare. and a Superannuation Salary Sacrifice

The journals on the following page will be created based on the Master Default flag being selected. If this flag has not been set the Cash Payment Journals will not be created for you. 

General Journals (GJ)

Below is the Accrual Payroll Journal. 

Payrun Finish Date  Description  Tax Code  Debit Credit
27/01/23 Wages – Factory (Expense)  $1153.85 
Superannuation Sal Sacrifice  $14.42 
Superannuation Payable  $14.42 
PAYG  $238.00 
Salaries Payable  $901.43

In this example, the Employee makes a Superannuation Salary Sacrifice of $14.42, hence the difference between Wages and Salaries Payable after allowing for PAYG tax. 

Below is the Staff Reimbursement Journal. 

Payrun Finish Date  Description Tax Code  Debit  Credit
27/01/23 Taxis & Tolls  S $20
Provision – Taxis & Tolls  S $20

Below is the Staff Reimbursement Cash Payment Journal (MP). 

Payrun Finish Date  Description Tax Code  Debit  Credit
27/01/23 Provision – Taxis & Tolls  & Tolls  S $20
Tax Out $2
Cash at Bank $22
  • The Accrual Payroll Journal (GJ) will provide the required data within the BAS at W1 and W2 for your reporting requirements.
  • The Staff Reimbursement Journal (GJ) will not impact the BAS provided you do not use an expense account which provides data to W1 within the BAS.
  • The Salaries Cash Payment Journal (MP) will not affect the BAS provided the Salaries Payable Account is flagged with the W Tax Code.
  • The Staff Reimbursement Cash Payment Journal (MP) will impact the BAS according to the Tax Code applied to the Provision Account. 

You can review our Blog and YouTube channel for additional information and resources on SapphireOne ERP, CRM and Business Accounting software.

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