Cash back redemption on corporate credit card

Accounting and Bookkeeping
1

I would like to know how others book their journal entry, present on financial statements, and enter in the tax return cashback redemptions?

The corporate credit card builds up a cash balance and gets paid out against the card balance.

  1. Journal entry:
    DT Credit card XXX
    CT Other income XXX

  2. Financial Statement presentation:
    Revenue XXX
    Other Income XXX

  3. T2 Tax return:
    Amount entered in Other income GIFI 8230

Are others doing it this way or another way?

2

That is how I do it

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3

I do it the same way too.

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4

That is correct Sir

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5

That is the way we do it.

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6

Thank you all for your replies I greatly appreciate it!

7

Is this Canada tax answers? In the US credit card rewards cash back or credits are a reduction of expenses and not taxable income/ revenue.

8

This is a forum for users of TaxCycle, a Canadian tax preparation software.

I am not sure if there is an incorrect way of handling this. I am sure for unincorporated clients, I have also reduced the credit card fees expense.

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9

A reduction of expenses is equivalent to an increase in income. All other things being equal, it increases the tax liability.

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