Canada Emergency Rent Subsidy - refund

Accounting and Bookkeeping
1

I would like to show how I plan on recording the Canada Emergency Rent Subsidy refund in the books and the tax return.

Refund gets recorded as “other income” in the books:

DEBIT Bank XXX
CREDIT Other Income XXX

On the tax return the refund would go under revenue specifically:

Other revenue
-GIFI 8242 Subsidies and grants

Comments/feedback would be appreciated.

2

I don’t have any clients using CERS, but that’s basically the same way I’m reporting CEWS income. I doubt the GIFI code matters much, as long as we report it as taxable income.

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3

That’s how I’m recording it, but being more specific so that if the auditor comes knocking I don’t have to dig our every application for every program.

I have:
Wage Subsidies
Rent subsidies
CEBA loan - forgivable portion

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4

The timing of the income is the period end date, so i would DR AR until received.

From TaxTips.ca
The rental subsidy is included in income immediately before the end of the qualifying period to which it relates , as is the Canada Emergency Wage Subsidy (CEWS), as per s. 125.7(3) of the Income Tax Act. For example, the subsidy for the 4 weeks ending October 24, 2020 is included in income on October 24, 2020, not when it is received.

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5

@Nezzer @dklassencga @grangers2016

Thank you for your responses! I truly appreciate it.

I have two follow up questions:

  1. FS presentation does this amount get grouped into the sales line or does it get its own line “Other Income” under the top sales line?

E.g.
A)
Sales XXXX
OR
B)
Sales XXXX
Other Income XXXX

  1. HST return would this amount go on the HST return?
    I understand it will not make a difference to the HST owing/refund amount because there is no HST but does it still need to be included in sales (line 101)?
6

  1. FS presentation is whatever your client wants, unless they are required to follow ASPE or IFRS or ASFNPO or something. Ask your client if they need to follow an accounting standard of any kind (i.e. companies listed on a stock market must follow IFRS; your client may have obtained financing that requires ASPE; etc).

  2. You could report it as “exempt income” on line 91 of the client’s HST return:
    https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/gst-hst-businesses/complete-file-instructions.html#lines909102

    CRA may appreciate the extra info - they might be less likely to investigate…?

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7

On the FS as Subsidies - under Other income
All income is reported on the GST/HST return, it just doesn’t attract the tax.

I never use line 91, but maybe I should. It’s never triggered an audit, but I have had phone calls occasionally to verify non-taxable revenue was generated.

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8

Hey guys there was a comment in the CEBA Loan Forgiveness post that made reference to the GIFI guide. Specifically,

*8242
Subsidies and grants
government assistance and subsidy payments (for non-fishing corporations), federal, provincial, territorial, or municipal grants received

  • Corporations, including non-profit organizations, can use this item to report federal, provincial, territorial, or municipal grants received.

If COVID-19 related assistance is received, report the amount on line 295 of T2SCH1, Net Income (Loss) for Income Tax Purposes. Do not include it under item 8242 .

9

You are correct @NiceGuy
It is also discussed in this thread:

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10

Thank you all for your responses - I truly appreciate it and very grateful.

11

Hello @Nezzer @dklassencga,

I want to mention something I came across regarding CERS and HST.

https://www.canada.ca/en/revenue-agency/services/subsidy/emergency-rent-subsidy/cers-after-apply/report-cers-on-your-tax-return.html#h_8

“No GST/HST reporting requirements”

No GST/HST reporting requirements

CERS amounts you received are not considered taxable supplies.

Do not include these amounts on the GST/HST return.

12

Thanks, @NiceGuy. Wouldn’t have expected them to be. But, nice to see it in black and white.

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