How do I account for GST paid (ITC's) for reimbursements paid to employees on their payroll?

Hello Bambrough,

Making sure you're recording your expenses the right way is a good habit for preventing errors in your books. I'll be happy to steer you in the right direction so you can focus on doing the things you enjoy. 

To ensure accuracy in your books, I recommend contacting an accounting professional to get more info on recording the transactions. Doing this will help prevent any future discrepancies in your books. If you're not in contact with one, I encourage you to search for one on our website using this link here. I'll also leave this question open so other community members can share their advice on this. 

Feel free to ask other questions in the comments below. I'm here to help. 

I did speak to an accountant and they told me the adjustment to make but he is not familiar with Quickbooks so has no idea how his suggested adjustment will translate into QBO reports only how I can report correctly to the CRA. 

I may not be doing this the right way, but the question posed by Bambrough is the same question I have. If $100.00 in fuel is reimbursed to an employee and I run a report for fuel cost, it will be under reported by that amount and when I submit GST/HST to CRA I could be over paying because the ITC of 11.50 is not recorded. The only way I can see doing it is by entering the expense under Fuel and paying by Petty Cash. This of course throws Petty Cash out of whack but I see no other solution - an accountant will only advise you that it has to be recorded to accurately reflect the transaction. If there is another solution, I would like to know? 

I was advised by my accountant to pay expenses and pay separately. I create a New Expense and when an employee's name is selected for Payee QBO automatically turns it into an Expense Claim and I can select the Category that fits the expense and capture the GST. 

It's a bit of a nuisance to have to pay out twice per employee but we are a small company and it works like a charm for us. 

Thank you Bambrough, I appreciate you taking the time to help out. That's how I actually did it but of course the cheques never cleared and I finally figured out what was happening. Although I do all the bookkeeping the owner does payroll since I am part-time. I will ask him to do it that way in future. I do have a few hundred dollars worth of ITC's though that I have to claim for 2021. Another problem for another day, I'll have to think on it!

Again, many thanks for your help and best regards..

The employees never cashed the cheques? We direct deposit their pay and write a separate cheque or etransfer for their expenses. 

I've missed ITC's in the past and our accountant just makes an adjustment to account for it at year-end. QBO is great but sometimes we have to customize and figure out workarounds for our particular businesses. 

I wish Intuit could allow us to have expense categories that go to the same accounts as the expense categories we've set up so that they went from payroll to the proper expense and GST accounts, however that is certainly not in play now. 

I was doing it through payroll for months before I realized the expense amounts were not accounted for outside payroll. They just have to be paid separately. 

You're welcome and have a great rest of the week!

Sorry Corrine, I missed thanking you! Appreciated. and going forward that will be the best way. I just have to clean up 2021.

Regards.

It's not that the employees didn't cash cheques, that's how I thought it was being done and wasn't aware it was being processed on a paycheque. All good now and thanks again.

Regards.