Fuel Reimbursement in Payslips

Hello, I’m new to Manager.

I’ve set up my chart of account and it was all fine until this problem came up…

Can anyone please guide that how to reimburse fuel amount to employees and show it in payslips as well by adding the amount in gross salary.

Gross Salary: 10000
Less: Income Tax: 2000
Add: Fuel Reimbursement: 1000
Net Salary: 9000

Go to settings → Payslip Items and add a new earnings item.

The “Payslip Summary” report will include it under heading “Gross Pay”.
The “Payslip Earnings” report shows amounts under separate headings.

But Alex, the thing is if i add it in earning then it’ll be taxable for the employee which is not right because the employee has paid it from his own pocket on company’s behalf.

The other option is to use “Expense Claims” but this will not show on the payslip. However, expense claims are able to be paid at the same time as a regular wage payment and pdf payment slip produced.

@iHamza, as @AJD has written, your question could cover two situations:

  • If employees buy fuel with their own money on behalf of the company, use expense claims, which will be posted as liabilities in Employee clearing account. Then, as you pay employees, you would pay them not only for payslips but for expense claims lodged in that account. See Use expense claims | Manager. Local tax laws will determine whether such a reimbursement is taxable to the employee. Usually, it will not be, because you are only reimbursing money they already spent for you, not providing them additional income. You are just repaying a temporary loan from your employee for a company expense. A local accountant should be consulted. You may need to consult both the Expense Claims Summary and the various payslip reports when filing your own (or the business’) tax returns.

  • On the other hand, if you pay a fuel allowance as part of employees’ compensation, that could be taxable. In that case, the fuel allowance should be shown as an earnings item, as @AJD first suggested. Again, a local accountant or the tax authority can help you understand which situation applies.