It has been a time of distress for many businesses and a challenge to survive. If you have not laid off your employees and were paying salaries and wages after March 18th 2020 below is a quick glance of full accounting transactions and back up you may need to implement in your small business.
10% Wage Subsidy: you had the right to decrease your income tax portion of source deductions for the period March 18th– June 19th. Here is an example of spreadsheet you may keep to properly trace your subsidy, payroll base is bi-weekly.
|Pay period 7||10%||Pay Period 8||10%||Total subsidy||Limit||Balance left|
Please pay attention that the Limit of $1,375 per employee needs to be observed, as well as the total per company of $25,000. In our example you see that employee on the third line already used the full subsidy in Pay Period 8. The others still have balance left. You will continue to add columns each pay period until June 19th or Pay Period 13.
Then to finalize your accounting transactions, you need to book Income. It would be recommended to create a separate account in your chart of accounts for this type of income, name it “Wage Subsidy” and for PP7 Debit Source deductions payable Income Tax account $1,342.84 and Credit “Wage Subsidy” account in Income statement. Thus your actual Income tax payable will decrease and the subsidy realized.