Staff Purchases

Topic: Staff Purchases and Refunds

A suggested method of handling and controlling Staff Purchases:

Often the company buys materials, etc on behalf of employees so that trade discounts can be obtained.  The employee subsequently reimburses the company for the purchase.  The company in these circumstances needs to handle GST accordingly.

The following maintenance should be performed:

1.  Staff Purchases GL Account

create a General Ledger (GL) account in the Asset section called Staff Purchases

2.  Staff Purchases Cost Centre

create a Cost Centre (CC) for the Staff Purchases and link to its corresponding GL Account

Posting the Supplier’s Tax Invoice:

The Supplier’s Tax Invoice is posted and coded to the General Ledger or Balance Sheet Job (GENLED or BALSH) and the Staff Purchases Cost Centre and GL account.  GST is recorded according to the Supplier’s Tax Invoice.  Therefore the company claims the GST Paid Tax Credits as for any other purchases.  Payment of the invoice is made accordingly.

Receipt of the reimbursement or refund:

The reimbursement to the company can be handled in a number of ways.

Option 1.

Post a negative invoice (i.e. credit note) to the Employee as the Supplier, coded to the GENLED Job and the Staff Purchases Cost Centre and GL account.  You will note that GST will be calculated to offset the originally recorded GST Paid Tax Credit.  The invoice should be paid through Posting – Payments as a negative payment which will be treated by the system as a Deposit for Bank Reconciliation purposes.  The reference (Next chq) on the Payment entry could be REFUND or your preference, making sure that the correct Bank has been selected.

Option 2.

Post a Claim to the GENLED Job with the Staff Purchases GL Account nominated.  The Claim will calculate GST Collected.  Then post a Receipt for the reimbursed amount to the GENLED Job and the appropriate Bank account.

In both examples the employee wears the GST component, and whilst the company reports GST, the net result is nil.  Option 1 is preferable, as Option 2 inflates recorded Sales from a BAS standpoint.

Other Refund and Rebate transactions would be handled in a similar manner to Staff Purchase Reimbursements, with the use of an appropriate Cost Centre and GL account.  This may be back against the original cost or to a specific Income account, depending on the nature of the transaction.