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What Is a Gas Reimbursement?

An employee may have to submit fuel receipts to verify that the company's money was spent on gasoline.
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  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 15 November 2014
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A gas reimbursement is a type of business reimbursement that provides a payment to an employee who purchases gasoline while traveling on company-related business. Sometimes referred to as a gas mileage reimbursement, this transaction has the purpose of reimbursing the employee for out of pocket expenses sustained while carrying out tasks assigned by the employer. A vehicle reimbursement program may function in two different ways, depending on whether the employee uses a personal or company owned vehicle for the travel, or utilizes a rental car for the trip.

One approach to the gas reimbursement is often referred to simply as a mileage reimbursement. In this scenario, the employee either is granted access to a company owned vehicle for the business trip, or rents a car that is used for travel to and from client sites. In this scenario, the employee must typically pay for the purchase of gasoline out of pocket, and retain the gasoline receipts. Once the trip is completed, the employee includes those receipts in his or her expense report, and is reimbursed for the exact amount of gasoline he or she purchased during the trip.

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A different approach to the gas reimbursement is often used when the employee chooses to drive his or her personal vehicle. Here, the focus is on the overall expenses that are incurred by using the vehicle for business travel. Rather than keeping track of the fuel purchased, the employee tracks the distance traveled for the duration of the trip. The employer then reimburses the employee based on the mileage, typically at a flat rate per mile that is set by a governmental regulatory agency. With this approach, there is no need to keep track of the amount of gasoline purchased, since the allotment per mile allows for the use of gasoline as well as the wear and tear on the vehicle.

It is important to note that in some nations, there is a clear distinction between these two types of reimbursements. In those settings, a gas reimbursement applies only to paying the employee’s out of pocket expenses in terms of the fuel purchased during the trip. The business culture in other countries may use the term to describe a reimbursement that is based on actual purchase of gasoline or the payment of a fixed rate per mile traveled. In the latter nations, the terms gas reimbursement and mileage reimbursement are often used interchangeably.

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