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...
  • IanChait's avatar
    IanChait
    6 years ago

    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.

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
6 years ago

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.

 

 

  • shau's avatar
    shau
    Experienced Cover User
    6 years ago

    In this case, I would rather treat it as my own money since it was given to me by my parent as a gift.  In this case, how would I record it as a deposit of my own money from another account - a transfer from an external bank account?

    • IanChait's avatar
      IanChait
      Ultimate Cover User
      6 years ago

      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.

      • shau's avatar
        shau
        Experienced Cover User
        6 years ago

        IanChait Thank you - that makes sense.  The 2 closest matches are:

         

        3-1000 Owner's/Shareholder's Capital

        3-2000 Owner's/Shareholder's Drawings

         

        I would guess 3-1000 is the relevant account here.

        Incidentally, what is the 3-2000 Owner's/Shareholder's Drawings account used for?

Looking for something else?

Search the Community Forum for answers or find your topic and get the conversation started!

Community home

Dig into MYOB Academy for free courses, learning paths and live events to help build your business with MYOB.