grant

Hello again cdza,

Grants are a wonderful thing, and I'm excited to hear that your business was able to benefit from one. I know, however, that they require a special touch when it comes to accounting since they don't fall under the same categories and sales tax requirements as sales and transactions such as that. I want to ensure that you're able to get back on track with this.

When it comes to questions about what accounts to allocate specific things to and how it's proper to mark taxes for them, those are questions best left for an accountant. As a member of the technical support team, I don't have the training to advise on these circumstances. I do see you say that this issue occurred because your accountant didn't enter the grant information properly in the first place, but I still recommend speaking with them and bringing to their attention how this doesn't seem quite right.

If you'd like a second opinion, checking in with another accounting professional doesn't hurt. What you can do is visit our Find an Accountant page to research other accountants near you that know the product. You may also receive responses on this thread from other users who've handled these kinds of transactions before. For a more immediate response and one that's tailored to your books, I recommend working with an accountant directly, however.

Wishing you the best with this!

Hello @cdza ,

You would set up an Other Income type account, calling it something like Grants or Grants & Subsidies.  The Other Income type separates this type of income from your operating income, which is a result of what goods and services you actually perform in your business.  It would be important to record the income from the grants you received in the same period as the related expenditures, so as to follow the matching principle.

In this case, you could use Exempt for the tax code, as Grants are not taxable. See the following from CRA:

  Goods and services tax/harmonized sales tax (GST/HST)

In general, the provision of financial assistance by a government (or other grantor) to an individual or a business to subsidize the individual or business for losses or expenses resulting from a disaster will not be considered a supply and, therefore, the GST/HST will not apply to it, as long as there is no direct link between the financial assistance and a supply by the individual or business to the grantor or a third party specified by the grantor. For more information, see Technical Information Bulletin B-067, Goods and Services Tax Treatment of Grants and Subsidies.

Thanks alot for the info LauraAB!

Thank you so much for this solution Rochelley!

Makes total sense, really appreciate it

You're welcome! I see you've also got a helpful response from @Rochelley, so it looks like you'll be well on your way. Have a great Friday and weekend! :)