How do you record a ATO Grant. The funds are not subject to company income tax nor do i pay GST on the funds received. How would you record this to show profits, cash at bank, without being subject to annual tax? Hope that makes sense.
Your help would be greatly appreciated.
Assuming you are referring to some sort of economic stimulus grant, and not a refund of recoverable VAT, enter a regular receipt, posting it to an income account (possibly a new one) not included in your taxable income. Apply no tax code.
Yes your right. Its a stimulus business cash boost grant.
I created a new income account called ATO grant.
How do i not include it in my taxable income. I can adjust it when time comes for annual tax but how do i
not include it in taxable income on the software.
What do you mean by taxable income?
The Tax Report is usually used for reporting Sales tax and the like
If you mean corporation tax then that is some different altogether
@Ashuraya, You have to debit cash and credit an income account. It won’t be taxed so long as you do not declare it as income from your trading activity.
Check with a certified local accountant
You are all set. Manager does not calculate income tax payable by a business. It only provides the numbers you need for your tax computations, assuming you have structured your chart of accounts correctly based on your organizational structure. When it comes time to file income taxes, you just exclude income in your new ATO grant income account from the income you report. (Or you include it and immediately subtract it, depending on how your filing form asks for the information.) It is very common in different jurisdictions around the world to have income accounts representing excludable income.
Add it back on your company income tax return under Item 7Q
Just keep in mind accounting systems are made to record all transactions.
Income may or may not be assessable or statutory income.
accounting systems are only interested in profit.
The differences between accounting profit and taxable income are taken up in the tax return or another schedule usually called a reconciliation statement.
There are several reasons for differences between operating profit and taxable income. These are either timing differences or permanent differences. For example you might calculate for accounting purposes depreciation of 20% on an item of plant based on its useful life, but tax law allows it as an instant asset write-off (a timing difference). You may spend $1000 on a Christmas Party and tax law doesn’t allow entertainment to be a deductible expense (a permanent difference).