How do I enter the 75% Canada Emergency Wage Subsidy in QBO

Hi there, 

Times are rapidly changing for small business owners across the country in these uncertain times. I know how important it is for you to keep up with these evolving circumstances so you can maintain your books. It's our goal to provide resources to help you through this.

The new Canada Emergency Wage Subsidy (75%) will become available for applications on April 27th, 2020. As of today, we haven't released an article outlining steps for entering this into QBO, but I'd encourage you to review the articles outlined on the CRA website. 

• Changes to taxes and benefits: CRA and COVID-19

This article will outline subsidies, as well as other support news for employers.
 

I'd also recommend looking into our Webinar resources, such as the one here: An Overview of the 75% Canada Emergency Wage Subsidy and Canada Emergency Response Benefit.

I hope this helps get you started. If you have any other questions, please don't hesitate to reach out to our tech support team.

Cheers. 

Is there any update on this now considering the funds are starting to roll in?

Maybe I am over simplifying this… but what do you guys think of the below journal entry to balance the Emergency Wage Subsidy received?

Step 1: I created another account using similar steps for the 10% Temporary Wage Subsidy under “OTHER INCOME”, and I called it “Canada Emergency Wage Subsidy”.  If you are unsure of the steps for that, please see this link (https://quickbooks.intuit.com/learn-support/en-ca/covid-19/temporary-wage-subsidy-for-employers/01/5...)

Step 2: Add below Journal Entry for the subsidy received:

                                                                        Debit                   Credit

Bank account Name (short term asset)   $XYZ     

Canada Emergency Wage Subsidy                                        $XYZ

I don’t think we should touch the payroll expense section.  Although the subsidy is a credit / refund to payroll already issued and paid, if we reduce the payroll expense instead, it will cause the record not match to what has been submitted to CRA?

Hi MBSIMolly. Thanks for your contribution in the thread. If you're not sure about the method you've shared above, the best way to get advice on this is to consult with your accountant.

If you're not yet connected to an accountant, you can find one in your area here: Find a ProAdvisor.

Cheers. 

I just spoke with my accountant and she advised to create an Income account titled "Government Assistance".  Debit Bank and Credit this new income account.

Hi Cindy, just to clarify, a new account should be created as an income account rather than an account to do with payroll? And then a journal entry is to be made debiting my bank account and then credit this new income account? So if the subsidy is classified as income then we will pay tax on it? I'm trying to get this all figured out so I don't totally mess my books up.

Yes...debit bank and credit income account.  The CEWS funds received are considered income and will be taxed in the year it's received.  

Hi Reeder, 

Thank you so much for your information! 

Are you able to break it down on how you created the accounts (was it in charter of accounts, which tax line did you use)

I am trying to account for the assistance given and also do a bank rec for this. 

Much appreciated! 

-J

Hello Folks,

I am not quite sure if the suggested JE will work. 10% CEWS is an offsetting credit from remittance check so the bank will not be a clearing account. To simplify, CRA will not refund employer for the subsidy.

Here is my scope, knowing that QBO doesn't allow using JE to adjust payroll liabilities:

1-Adjust payroll liabilities (I prefer to decrease Fed tax) for the value calculated equal to 10% CEWS. This will DR- PYRL LBTY   and CR - Payroll expense

2- Create a reversed JE DR - Payroll expense then clear it against the Revenue account you created i.e. "CEWS subsidy"

Majid Valad of

Accountable Accounting and Tax services

Hi Addie, is there not a formal and definitive suggestion from QB?

Thx

Hi Roughbrook,

Entering the wage subsidy into your QuickBooks Online account is the best way to make sure your payroll information stays correct. I can help point you in the right direction.

At this time the only information we were provided by the CRA is for the 10% wage subsidy which can be found here. For the 75% we recommend reaching out to an accountant as they are trained in how to make these entries. If you don't have an accountant no worries, we can help. You can go to: My Accountant>Find a pro to help. There you can find an accountant in your area who can help.

Have a great day!