When you're registered for GST/HST, VAT, or Australian GST, and you invoice a client for expenses you incurred on their behalf, you generally need to charge tax on the full invoice amount — including those rebilled expenses. This is one of the most common invoicing mistakes: freelancers charge HST on their labor but forget to charge it on the $800 hotel stay they're passing through.
The result: you owe the tax to CRA out of your own pocket, because you collected less than you should have. This guide explains the rules for Canada, the UK, and Australia — and shows how ExpenseBot handles the correct tax calculation automatically when you generate a client invoice.
When You Bill Expenses Back — Do You Charge Tax?
The core rule: if you're registered for GST/HST, VAT, or GST, your invoice must charge tax on the full amount you're billing — including any expenses you're passing through to the client.
The reason: when you invoice a client, the entire invoice is considered a single taxable supply of your services. The hotel, software, or travel expense you're rebilling is part of the service delivery. CRA, HMRC, and the ATO treat it as part of your supply, not as a separate transaction.
The common mistake: a Canadian consultant invoices $3,000 for services + $800 for a Toronto hotel. They charge 13% HST on the $3,000 ($390) but forget to add HST on the $800. The client pays $4,190. CRA expects HST on the full $3,800, which is $494. The consultant owes $104 out of pocket.
The exception: disbursements under an agency arrangement. If the client's name appears on the original receipt, you paid on their behalf as an agent (not as a principal incurring the expense yourself), and you pass it through at exact cost with no markup — this may qualify as a disbursement, not subject to HST. This is a narrow exception. Most freelancers bill reimbursements (your name on the receipt, part of your service delivery), not disbursements.
Canada — GST/HST on Rebilled Expenses
If you're registered for GST/HST (required once you exceed $30,000 CAD in taxable supplies), you charge HST on every dollar on your invoice — including passthrough expenses.
Provincial HST rates for 2026:
| Province/Territory | Rate | Notes |
|---|---|---|
| Ontario | 13% HST | Most common for freelancers |
| British Columbia | 12% (5% GST + 7% PST) | PST billed separately; professional services often PST-exempt |
| Alberta | 5% GST | No provincial sales tax |
| Quebec | 14.975% (5% GST + 9.975% QST) | GST and QST shown separately; separate QST registration required |
| Nova Scotia / NB / NL / PEI | 15% HST | Atlantic HST rate |
| Saskatchewan / Manitoba | 5% GST + provincial sales tax | PST rates vary; professional services often GST only |
What goes on the invoice: your GST/HST registration number (BN with RT suffix), line items for your services and each rebilled expense, the applicable tax rate, and the total tax amount collected. Missing your BN means the client can't claim their input tax credit — they'll ask you to reissue.
Your input tax credits: you can claim an ITC on the original expense — the $800 hotel has 13% HST on it, which you can recover from CRA. You collect HST from the client on the full $800. The two amounts approximately wash (exact calculation depends on when/where you paid the hotel and where your client is located).
UK — VAT on Rebilled Expenses
If you're VAT-registered (required once you exceed £90,000 in taxable turnover), VAT at 20% applies to your entire invoice, including rebilled expenses.
The agent exception (disbursements): if you pay a supplier as an agent for the client — the supplier would have invoiced the client directly if they'd known — and you recharge at exactly what you paid with no markup, you may be able to treat it as a disbursement outside the scope of VAT. Requirements are strict: the client must be the actual recipient of the supply, the cost must be shown separately on your invoice as a reimbursement, and you must not have recovered input VAT on the original expense.
For most freelancers, expenses incurred in delivering your services (travel to client site, software for the project) are not disbursements — they're part of your taxable supply. Charge 20% VAT on the full invoice.
Your VAT invoice must show: your VAT registration number, "VAT Invoice" header, net amount, VAT rate, VAT amount, and gross total. For rebilled expenses, show each as a separate line item at the net amount — the VAT applies to the total at the end, not line by line, for a single VAT rate.
Input VAT recovery: if you paid VAT on the original expense (most UK supplier receipts include 20% VAT), you can claim that as input VAT on your VAT return. The gross-up math: you recover the VAT you paid to the supplier, collect VAT from the client, and remit the difference.
Australia — GST on Rebilled Expenses
If you're GST-registered (over $75,000 AUD in annual revenue, or voluntarily registered below that), 10% GST applies to all taxable supplies on your invoice, including rebilled expenses.
Tax invoice requirements: your invoice must show "Tax Invoice," your Australian Business Number (ABN), the GST amount shown separately from the net amount, and the total. For invoices under $1,000 AUD, a simplified tax invoice may suffice — supplier name, ABN, date, brief description, GST content stated or calculable.
BAS reporting: on your Business Activity Statement, you report the GST you collected from clients (output tax) and the GST you paid to suppliers on deductible expenses (input tax credits). For a rebilled expense, both the input credit (what you paid the supplier) and the output tax (what you charged the client) appear on the BAS. The net is approximately zero — you're acting as a collection conduit for the ATO.
How ExpenseBot Handles This Automatically
When you tag an expense to a client project in ExpenseBot and click "Bill Client," the modal suggests the correct tax rate based on your account settings — your country and province/territory. Ontario-based? 13% HST is suggested. BC? 5% GST (PST excluded for professional services by default). UK? 20% VAT. Australia? 10% GST.
The workflow is:
- Scan or forward receipts to ExpenseBot as you incur project expenses — hotel receipts, software costs, subcontractor invoices
- Tag each expense to the client project using ExpenseBot's tag system
- At billing time, open Bill Client and select the date range
- All tagged expenses appear as line items with the correct amounts. The modal calculates the applicable tax on the full invoice (services + expenses)
- The generated invoice shows your registration number, tax rate, and tax amount — ready to send
The "only if registered" caveat is built in: ExpenseBot never auto-applies tax for unregistered users. The tax suggestion only appears after you've entered your GST/HST, VAT, or ABN registration number in Settings.
For tracking reimbursable expenses in more detail, see reimbursable expense invoice. For Canadian freelancers, see expense tracker Canada for the full T2125 and ITC tracking workflow.