Receiving money that is not income: credit note?

Question

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.&nbsp; How should this be recorded?&nbsp; Do I create a credit note in the receiving bank account, with a transaction tax code of N-T?

ianchait · Accepted Answer

Hi&nbsp;shau&nbsp;&nbsp;The deposit does not involve GST, so the code would be N-T.&nbsp;&nbsp;If you are a Sole Trader, you will have an Equity Account 3-XXXX called Owners Contribution or something similar. Use this account.&nbsp;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.

gday53 · Answer

shau&nbsp;&nbsp;Theresa_D&nbsp; 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.&nbsp;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.&nbsp;&nbsp;

theresa_d · Answer

Hi&nbsp;shau&nbsp;
&nbsp;
Thanks for your post. In a situation like this it is best to speak with your accountant on how to handle this transaction.&nbsp;
&nbsp;
Feel free to use the forum if you have any other questions.&nbsp;

theresa_d · Answer

Hi&nbsp;shau&nbsp;
&nbsp;
Financial advice, such as what tax code to allocate or accounts to assign, constitutes advice that I am unable to provide.&nbsp; I will tag some of our partners&nbsp;GDay53&nbsp; IanChait&nbsp;who may be able to assist.&nbsp;
&nbsp;
If you need to record receiving money within AccountRight the help article Receive Money will provide information on how to do so.&nbsp; I hope this helps, let me know how it goes.&nbsp;

ianchait · Answer

Hi&nbsp;shau&nbsp;&nbsp;Yes, using Owners/Shareholder's Capital is fine.&nbsp;Owners/Shareholder's Drawings is the account you would use if you are a Sole Trader to record any payments you have made to yourself, or personal expenses paid from the business. If the business is a company, it should not use this account, but rather a&nbsp; 1-XXXX or 2-XXXX account. It puts it in a different place on the Balance Sheet.&nbsp;Hope this helps.

ianchait · Answer

Hi&nbsp;shau&nbsp;&nbsp;If the Shareholder/ Owner is putting money into the business, (Eg a loan to the business) it would be a 2-XXXX Account. Then any further transactions could be recorded to that same account.&nbsp;If they have no intention of putting money into the comany, and are just taking it out, they would have a debit balance(which could have significant tax consequences) and you could then use a 1-XXXX account.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

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Receiving money that is not income: credit note?

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