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Receiving money that is not income: credit note?

shau

I received $2000 from my mum intended to support my business, but I would not regard this as not income, but rather, an interest-free loan or potentially even a gift if the business fails and I can't repay her. How should this be recorded? Do I create a credit note in the receiving bank account, with a transaction tax code of N-T?

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Accepted answers

IanChait

Hi @shau

The deposit does not involve GST, so the code would be N-T.

If you are a Sole Trader, you will have an Equity Account 3-XXXX called Owners Contribution or something similar. Use this account.

If you operate via a Company or Trust, you should have a Liability Account 2-XXXX called Loan - (Your Name). Record the deposit to that account.

All comments

shau

@Theresa_D wrote:
Hi @shau

Thanks for your post. In a situation like this it is best to speak with your accountant on how to handle this transaction.

Feel free to use the forum if you have any other questions.

@Theresa_D That was really unhelpful. Not everyone can afford a tax accountant and what I'm asking is a really basic and simple question that doesn't really have any nuance.

Theresa_D

Hi @shau

Thanks for your post. In a situation like this it is best to speak with your accountant on how to handle this transaction.

Feel free to use the forum if you have any other questions.