Verified for 2026 Tax Year

How to Handle GST on Employee Reimbursements (NZ)

Your team is buying supplies out of pocket. Here is how to legally claim back the GST while keeping your IRD records audit-proof.

When an employee pays for a business expense using their own money and you pay them back, it's called a reimbursement. To the IRD, this is treated as if the business bought the item directly—meaning you can claim the GST back.

The Golden Rule

To claim GST on a reimbursement, the expense must be for a taxable activity of the business, and you must hold a valid Tax Invoice from the original supplier.

Reimbursements vs. Allowances

Reimbursements

Paying back the exact amount spent (e.g., a $25 hammer). GST can be claimed because there is a specific invoice for a specific purchase.

Allowances

Paying a flat rate (e.g., $10/day for lunch). GST cannot be claimed because there is no specific invoice for a taxable supply to the business.

Documentation Requirements

If the reimbursement is over $50, you MUST have a tax invoice to claim the GST. If it's under $50, a simple receipt is sufficient, but the business should still keep a record of the purchase.

✓ Collect original tax invoices from employees.
✓ Ensure the invoice is made out to the business (for amounts over $1,000).
✓ Link the reimbursement to a specific business project or office need.

The $1,000 Trap

If an employee buys an item worth over $1,000 (incl. GST) and the invoice is in their name only, the IRD may deny your GST claim. Large purchases should always be invoiced to the business name.

Common Examples

Materials

Claim 100% GST

Client Coffee

Claim 50% GST

Staff Travel

Claim 100% GST

Is it a valid claim?

📱 Work Phone: Valid claim if used for business. Pro-rata if mixed use.
☕ Staff Lunch: Entertainment rules apply (usually 50% GST claimable).

Reimbursement Claim Rules

Purchase Under $50

A basic receipt is fine. You can claim the GST portion without needing a formal Tax Invoice.

Purchase $50 - $1,000

You MUST have a valid Tax Invoice to claim the GST back.

Purchase Over $1,000

The Tax Invoice must be made out directly to the BUSINESS NAME, not the employee's personal name.

Frequently Asked Questions

Can I claim GST on expenses paid for by my employees?

Yes, provided the expense is for business purposes and you reimburse the employee the exact amount. You must retain the original tax invoice for the purchase.

Do I need a tax invoice for small reimbursements under $50?

For purchases under $50 (including GST), a tax invoice is not strictly required by the IRD, but you must still keep a record of the purchase (like an EFTPOS receipt) to support your claim.

Can I claim GST on a flat-rate 'per diem' allowance?

No. Flat-rate allowances are not reimbursements of specific taxable supplies. GST can only be claimed when you are paying back the actual cost of a specific purchase backed by an invoice.

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