Tuesday, 24 March 2020

GST and Income Tax on Government Covid-19 Subsidies

When you receive a wage subsidy payment from the Government, the coding in Xero will be as follows:

  • The income (amount received) is coded as sundry or other income (with NO GST)
  • The wages payments to staff are done through the payroll as normal wages with PAYE etc and coded accordingly.
Please clearly identify that the income is from the subsidy. Because when we prepare your annual financial statements we will record the wages subsidy income as "non assessable income" so this subsidy is not included in taxable income. We will prepare be the necessary reconciliation and work-paper to support this in your tax return.


Disclaimer: This information has been prepared based on the current information available and is subject to change.