Definition
An expense report is a document submitted by an employee to record out-of-pocket business expenses paid personally for reimbursement. It typically itemises the date, vendor, amount, category, and business purpose of each expense, supported by receipts (or images of receipts). Modern accounting platforms (Xero, QuickBooks Online, Sage) include dedicated expense-claim workflows that let employees submit, managers approve, and bookkeepers post and reimburse without manual data entry.
What an expense report means in practice
For a bookkeeper, expense reports are the operational workflow for everything an employee buys on their own card or in cash that the employer needs to reimburse. The pattern is universal: employee captures the receipt (Xero Me, QuickBooks app, Dext), categorises and adds business purpose, submits the claim, manager approves, bookkeeper reviews and posts. Reimbursement happens via the next payroll run or via a separate bank transfer.
The most common compliance failures: missing receipts (the claim is approved on the employee’s word but cannot be supported on tax authority enquiry), personal items mixed with business (a phone charger included alongside genuine business expenses), and excess reimbursements above the country’s tax-free thresholds (which trigger employee tax). Modern receipt-capture tools catch the first two; the third needs payroll-side discipline.
A practical example: an AU consultancy employee attends a 3-day conference in Melbourne. Out-of-pocket expenses: AUD 1,800 hotel, AUD 240 meals, AUD 180 mileage (200 km at 88c reimbursable + AUD 4 parking). Total claim AUD 2,224. The employee submits via Xero Me with receipts attached. The bookkeeper reviews and approves. Xero posts: debit travel expense AUD 2,040, debit mileage AUD 176, debit parking AUD 4, debit input GST AUD 198.55 (where applicable on hotel and meals), credit employee expense-claim liability AUD 2,224. The next payroll run reimburses AUD 2,224 to the employee alongside their net pay.
How expense reports work by country
United Kingdom
Reimbursements at or below HMRC’s published rates are tax-free. The main rates: AMAP for mileage (45p / 25p per business mile), HMRC subsistence scale rates for meals and accommodation on business travel, and benchmark scale rates for international travel. Reimbursement of actual receipted expenses (not at a fixed-rate allowance) is generally also tax-free where the expenditure was wholly and exclusively for business. Above the published rates, the excess is reportable on a P11D as a taxable benefit. Receipts must support every claim for HMRC enquiry purposes.
Australia
Reimbursement of actual business expenses is generally not assessable income to the employee under section 32 of the ITAA 1997. The ATO publishes “reasonable amounts” for travel allowances annually; reimbursements within these amounts do not require itemised receipts. Above the reasonable amounts, the excess is taxable and PAYG withholding may apply. Allowances paid as fixed amounts (not reimbursements of actual costs) follow different rules and are generally taxable.
Canada
Reasonable reimbursements for business expenses are not a taxable benefit under CRA T4130. Above the CRA reasonable rates (70 cents per km mileage for the first 5,000 km in 2026), the excess is a taxable benefit reported on the T4. The CRA’s “all reasonable expenses for business” test is similar to the UK’s wholly-and-exclusively test.
New Zealand
Reimbursements at IRD’s Tier One rate (1.04 NZD per km in 2025-26 for the first 14,000 km) are tax-free. Above the Tier One rate, the Tier Two rate (0.34 NZD per km) applies; above 14,000 km, only the Tier Two rate applies. Any reimbursement above the IRD-approved rate is taxable. The IRD payday filing regime captures the data in real time.
Singapore
Reimbursement of actual business expenses is not assessable income to the employee. Excess reimbursements (above actual costs) are taxable and must be included in the IR8A annual return. There is no statutory mileage rate; the IRAS approach is actual costs apportioned by business-use percentage.
Related terms
Expense reports are the employee-reimbursement variant of the bill workflow:
- Accounts payable is the supplier-bill equivalent (third-party owed) rather than employee owed.
- A journal entry posts the expense claim on approval.
- A tax invoice is what supports any input VAT or GST claim on each expense line.
- Mileage allowance is the most common expense-report category.
- Petty cash is the alternative to expense reports for very small cash purchases.
See also
For supplier bills (the non-employee equivalent), see the accounts payable entry. For mileage claims, see the mileage allowance entry.
FAQ
See the answered questions above for expense report vs supplier bill, recording in Xero, and tax-treatment of reimbursements.