Forum Discussion

shau's avatar
shau
Experienced Cover User
6 years ago

Receiving money that is not income: credit note?

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?

  • 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.

  • 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. 

    • shau's avatar
      shau
      Experienced Cover User

      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.

      • GDay53's avatar
        GDay53
        Ultimate Cover User

        shau 

         

        Theresa_D  is correct in that any advice on Tax codes can only be given by a Registered BAS or Tax Agent.

        Anyone elese would be in breach of the Tax Laws.

        If you are in business then you should have both a good BAS Agent / Bookkeeper and a good Tax Accountant.

         

        In regard as to how to record the money if it is a loan then it needs to be recorded as such as a liability.

        If not then the question becomes is it a capital investment?

        As a capital investment it would be entered as either Liability or Equity.

         

         

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