TaxTMI 
TaxTMI 
A Worker was on pay roll of the contractor. On his death, compensation to his family was initially paid by XYZ. However, as advised by the Insurance Company, it was to be paid by the contractor and therefore, the amount paid to the employee was recovered from the contractor by XYZ. Is XYZ required to pay GST on the amount recovered from the contractor?
GST on amount recovered from contractor
28 Dec 2021 
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GST on reimbursements: recovered compensation from contractor is not taxable as no consideration and no supply.
The amount recovered by the principal from the contractor for compensation originally paid to a worker is a reimbursement of a wrongly borne payment and does not constitute consideration for a supply; accordingly, it falls outside the GST definition of taxable supply and is not subject to GST. (AI Summary)
The amount recovered by the principal from the contractor for compensation originally paid to a worker is a reimbursement of a wrongly borne payment and does not constitute consideration for a supply; accordingly, it falls outside the GST definition of taxable supply and is not subject to GST. (AI Summary)