Reimbursable expenses are business costs that an individual pays for personally but are later paid back to by someone else, typically an employer or a client.

These are expenses that you incur while conducting business or work-related activities that aren’t part of your regular salary or compensation. When you submit proper documentation (like receipts), the organisation agrees to pay you back for these costs.

For an expense to be considered reimbursable, it must generally be:

• Directly related to business operations
• Reasonable and necessary
• Documented with appropriate receipts or evidence
• Compliant with company expense policies
• Aligned with Australian Taxation Office (ATO) guidelines

Common types of reimbursable expenses in Australia

1. Travel expenses

• Airfares, train tickets and other transport costs
• Accommodation
• Meals and incidentals while travelling
• Taxi fares and ride-sharing services
• Car hire and associated costs
• Vehicle mileage (when using a personal vehicle for work purposes)
• Parking fees and tolls

2. Client and business entertainment

• Business meals with clients or prospects
• Appropriate entertainment costs with legitimate business purpose
• Venue hire for business events
• Catering for business meetings

3. Work-related supplies and equipment

• Office supplies
• Books, publications, and reference materials
• Software subscriptions and digital tools
• Small equipment purchases (subject to capitalisation policies)
• Mobile phone expenses for business use

4. Professional development

• Conference and seminar fees
• Course registrations
• Professional membership fees
• Required certifications and licensing costs

Reimbursement process

Most Australian organisations follow a standard process for expense reimbursement:

1. Pre-approval (when required for larger expenses)
2. Expenditure by the employee
3. Documentation collection (receipts, invoices, etc.)
4. Submission of expense claim with supporting documentation
5. Approval by authorised manager or finance personnel
6. Processing by accounts payable
7. Reimbursement to employee’s bank account

Taxation considerations

FBT Implications

Some reimbursed expenses may trigger Fringe Benefits Tax (FBT) obligations for employers. Understanding the FBT status of reimbursements is crucial for Australian businesses to ensure compliance and manage tax liabilities.

GST Treatment

For GST registered businesses, input tax credits may be claimed on reimbursed expenses where a valid tax invoice is provided. The employee must provide original tax invoices to the employer for this purpose.

Substantiation requirements

The ATO requires proper substantiation for expense claims, including:

• Details of the supplier
• Amount of the expense
• Nature of the goods or services
• Date the expense was incurred
• Date of the document

Best practices for Australian businesses

Clear expense policies

Develop and communicate comprehensive expense policies that outline:

• Which expenses are reimbursable and which are not
• Spending limits and thresholds
• Required documentation
• Submission timeframes
• Approval processes

Efficient systems

Implement digital expense management systems that:

• Simplify the submission process
• Facilitate electronic approval workflows
• Integrate with accounting software
• Enable mobile receipt capture
• Track expenses

Regular reviews

Conduct periodic reviews of:

• Expense policies to ensure they remain relevant
• Reimbursement practices to identify improvement opportunities
• Expense data to identify spending patterns and potential savings

Common exclusions

Expenses typically not reimbursable include:

• Personal items and services
• Fines and penalties
• Expenses covered by allowances
• Unreasonable or excessive costs
• Expenses without proper documentation
• Costs that violate company policy