Employee Reimbursements and GST

Question: Discuss about the Employee Reimbursements and GST. Answer: Introduction: An entrenchment clause under law and constitution is that provision which make particular amendments difficult or impossible. Entrenchment clause states that particular amendment in the constitution requires a type of supermajority, consent from another party to make amendment, and may be submission of referendum to other people. Intention of entrenchment clause is to prevent the amendments made subsequently in the constitution or make a particular portion of law irrevocable except in case of right of revolution. Any amendment in constitution which would not satisfied the conditions of valid entrenched clause will result in "unconstitutional constitutional law". Unconstitutional constitutional law means any amendment made in constitutional law which would consider as constitutional law only through its form, and it is unconstitutional through procedure. The main aim of this clause is to protect the rights of minority, and to prevent the amendments to the constitution of the company (Constitutional Review Committee, n.d.). Corporation Act 2001 provisions also defined entrench provision such as Section 136(2) requires special resolution for making any necessary changes in the constitution of the company. Section 136 (2) of the corporation act 2001 states that company can modify its constitution or any provision of its constitution only by special resolution, and in case constitution is adopted by court than company required leave of court to modify the constitution (Corporation Act 2001, n.d.). we can understand this with the help of example such as: In case any special resolution alter, add or omit any clause which is considered as entrenched provision does not have any effect unless it is approved in the general meeting of the company by majority that is: At least hold 75% of the votes in the company. Comprise at least 75% of the members of the company. Notice of general meeting in which that special resolution is proposed must be given at least 21 days before. General meeting in which that special resolution is proposed shall not transact any other business. In the present case, David wants to include entrenched clause in the constitution of the company. David states that he wants to retain the control of the company in his hands from both perspectives either managerial or ownership. He also states that for help he needs other people also such as staff and his mother. Its also possible that at later stage his wife Lisa also join the business. Reimbursement of expenses- expense reimbursement is a process through which employer payback the expenses incurred by the employees from their own money for the purpose of employers business. Generally these expenses occurred at the time of travelling for business it can be occurred in other situations also which is related to work. It is necessary for employers that they pay back the amount incurred by employee for the purpose of business (The balance, 2016). Usually, reimbursement is compensating someone for the expenses occurred by that person out of pocket. If any employee spend any amount of money on the activity related to business then in such case that employee is entitled to reimburse the amount spend by him. It is necessary to reimburse the claim that it must be fair, reasonable and valid. Before the process of any claim it is necessary that employee provide proper evidence of the expense he occurred. It is necessary that claim made by employee must be accompanied by evidence, and that evidence must be authenticating (Government of Western Australia, n.d.). We can understand this with the help of the example that is Alexandra employs Petra in her advertising agency, and later on Petra purchased craft material for presentation that cost $90. According to the provision of agency any expenses incurred by employee related to business shall be reimbursed in case if proper invoice are presented. Petra makes claim for the reimbursement of expenses with the proper invoice, and Alexandra repay her those expenses (ATO, n.d.). In the present case, Tom is the office manager of company, and working from last 5 years with David. Tom gives authority to Michelle who works as a receptionist in the company to purchase stationary for office work from the place where company operates its credit account. In this Tom works as senior position and he gives authority to Michelle for purchasing stationary for office work that is cost up to $ 1200 and I pad also. In this Tom gives authority to Michelle for purchasing I pad and stationary cost $ 1200. Therefore, in this Michelle has authority to purchase the material up to $1200, and also a i pad, and company is bound to pay Michelle for the expenses she incurred for office work. It must be noted that Michelle has authority to purchase office material up to $1200 only, and if she spend more amount on that then in such case company is not bound to pay any amount to her. References: Constitutional Review Committee. Entrenchment Clause and Country Cases. Retrieved on 23rd November 2016 from: www.constitutionalreview.gov.sl/site/Portals/1/.../what_is_entrenchment_clause.docx. Corporation Act 2001-s136. The balance, (2016). What Is Expense Reimbursement. Retrieved on 23rd November 2016 from: https://www.thebalance.com/what-is-expense-reimbursement-1918122. Government of Western Australia. Reimbursement. Retrieved on 23rd November 2016 from: https://www.courts.dotag.wa.gov.au/R/reimbursement.aspx?uid=7786-1265-3771-6567. ATO. Employee reimbursements and GST. Retrieved on 23rd November 2016 from: https://www.ato.gov.au/Business/GST/In-detail/Rules-for-specific-transactions/Employee-reimbursements/Employee-reimbursements-and-GST/.