Non-Taxable Grants

[Mike or Penny Novack]

Roger wrote:

> In Canada we've received grants from the Ontario government to cover 
> cost of converting to HST.  I am confused because it is income and I 
> don't know where to put it so that I won't be paying tax on it.  How 
> should it be recorded in Gnucash so that no tax will be paid on it?
>
Not precisely a gnucash question (you'd apparently have the same 
question keeping books the old fashioned way on paper)

Begin at the beginning. WHY are you assuming that just because something 
is "income" it would be taxable? Assuming that Canada isn't that 
different than here (or anywhere else) in this regard it has tax rules 
defining what is or isn't taxable and those rules are very unlikely to 
be as simple as "whatever is considered "income" in bookkeeping. Heck, 
likely you have to report different sorts of (taxable) income on 
different lines of the tax form (I do here in the US) and not all 
necessarily taxed at the same rate.

Isn't it the same for you on the expense side? Some sorts of expenses 
perhaps deductible in tax reporting, others not?

OK -- you want a how to do answer. Well fix up your chart of accounts to 
reflect that some of the income accounts are taxable and other not. 
Under Income you create placeholder accounts with names like "Taxable 
Income" and "Non-taxable Income" and put your income accounts  as 
children under these according to whether taxable or not.

Michael D Novack, FLMI