The driver was sent on a business trip. During the trip, the car broke down and had to be repaired, which required spare parts. With the permission of the head, the driver bought them,and after returning from the business trip he/she asked for a refund. How it should be done – in the following.
Report on money spent
First of all, the employee must prepare and submit a report on the money spent to the accounting department. The amount of compensation will not be his/her income, therefore the personal income tax (hereinafter − PIT) should not be withheld from this amount.
According to the letter of the National Bank of Ukraine (hereinafter − the National Bank, NBU) dated 14.09.2016, No. 18-0005/7694, relations that have arisen between a company and an employee, who purchased goods (work, services) for his/her own funds have a civil law nature. They are also regulated by Art. 1159, 1160 of the Civil Code of Ukraine (hereinafter – CCU).
It should be noted that such relationships have many common features with the labor ones. After all, the goods were purchased for the needs of the company, within the limits of official authority of the employee, the costs are reimbursed at the expense of the company. The Ministry of Insurance policy in its letter dated 14.09.2016, No. 13517/0/14-16/13 recommends that such relations to be considered within the framework of labor legislation.
Article 1159 of the CCU does not specify the form in which a report is to be made. However, we recommend using the Report on the use of funds issued for business trips or under the report approved by the Order of the Ministry of Finance dated 28.09.2015, No. 841.
Cash restrictions
In accordance with the requirements of the new Provision on conducting cash transactions in the national currency in Ukraine, approved by the Resolution of the NBU Board dated 29.12.2017, No. 148, the limit limits remained unchanged, and the maximum amount of settlements in cash between enterprises (entrepreneurs) within one day is UAH 10 000.
An employee of a company, who has purchased inventories for the production (economic) needs of the company for his/her own cash, receives a cash receipt stating the name of the company (entrepreneur), the seller of the goods (services). Consequently, there will be a cash restriction, and during the day it is impossible to give the employee cash in excess of 10 000 UAH.
Reflection in accounting
It should be noted that the documents for the purchase of spare parts is better to issue not to the employee, but to the company. This will allow avoiding problem issues with recognition.
Material assets should be recognized at the balance sheet of the company at their original cost, which in fact will be their production cost (paras.8, 9 of Accounting Standards 9 “Inventories”). Receipt of inventories must be registered by means of materials receipt ticket (typical form No.M-4).
The company’s debt to the employee for the purchased material assets should be reflected under the sub-account 372 “Settlements with reporting entities” in correspondence with the debit of sub-account 207 “Spare parts”.
Income tax
According to para. 134.1.1 of the Tax Code of Ukraine (hereinafter − TCU) the object of taxation should be calculated on the basis of “accounting” financial result. At the time of the calculation of the company with the employee there is no income or costs. After using the material values their cost will go into the cost. These could be accounts 23 “Production”, 91 “General production costs”, 92 “Administrative expenses”, 93 “Sales expenses”, 94 “Other operating expenses” depending on the use of spare parts.
VAT
There will be no tax invoice in the situation under consideration. According to para.201.11 of the TCU, the probability of obtaining a tax credit is only under a fiscal check, provided that the cost of purchasing spare parts does not exceed UAH 200 per day (excluding VAT).
