Non-Taxable Grants

[Roger]

Thanks Michael, you're correct I would have the same question using 
paper. However, watching the Gnucash forum I have often seen accounting 
problems answered and hoped someone would be kind enough to answer my 
simple accounting question.  Thanks to you I was right and I appreciate 
your time and expertise.

Thanks,
   Roger

On 11-05-05 04:45 PM, Mike or Penny Novack wrote:
> 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
>