Employees expenses can either be processed manually or submitted and approved via Xero Expenses. Once the Employee expense has been recorded, it can be reimbursed to Employees via Xero Payroll. 

Review Employees' Expenses

Employees' expenses can be entered via Xero Expenses or can be entered manually as a Purchase Transaction.

Employees' expenses fall within the same principles of deductibility for GST, Income Tax and FBT risk as any other expenses. 

1. All expenses claimed must be Business related;
2. All expenses claimed over $82.50 (GST Inclusive) must be supported by a Tax Invoice;
3. All expenses claimed with the nature of staff entertainment or gifts exceeding $300 (GST Inclusive) represent an FBT risk.

 If you are not the person approving the expense claims, you should review the approved expense claims and ensure the expenses claimed are coded correctly.

1. Go to Contacts > Suppliers
2. Find the #Employeename (Expenses) Contact
   
   è  The Employee Expenses Contact screen
   
   
   
   
3. Open the Bill Expense Claim you wish to reimburse
   
   è  The Employee's Bill Expenses Claim
   
   
   
   
4. Make sure the expenses in the claim:
   • are of a Business nature;
   • have supporting source documents (Tax Invoice) attached for any expenses over $82.50 (GST Inclusive);
   • any entertainment expenses have the BAS Excluded Tax Rate assigned;
   • any overseas expenses have the GST Free Expenses Tax Rate assigned;
   • flag any staff entertainment or gifts expenses over $300 (GST Inclusive, per head, per instance)
5. Go to the Make a payment section of the Purchase Transaction and pay the Expense claim as follows:
   • Amount Paid > Confirm the total value of the expense claim bill
   • Date Paid > Use the same pay date as the Pay Run you are going to include this expense reimbursement
   • Paid from > Select: Payroll - Reimbursable Expenses (820)
6. Click on [Add Payment]

Reimburse Employees' Expenses through Payroll

1. Go to Payroll > Pay employees
2. Click on [Add Pay Run]
   
   è  The Pay Run screen opens
   
   
3. Open the Employee's Pay
   
   è  The Employee's Pay
   
   
   
4. Click on [Add Reimbursement Line]
   
   è  The Reimbursement Line pop up screen opens
   
   
   
5. Select/Enter the following details:
   • Reimbursement Type > Select: Staff Reimbursable Expenses
   • Description > Use the same description you used in the Reference field of the Expense claim bill
6. Click on [OK]
   
   è  The Reimbursement Line is added to the Pay
   
   
7. Type the total value of the approved expense claim and click on [Save]
8. Finalise the Pay Run as per normal