How to Set Up and Use the MSD Wage Subsidy

For tracking of the Governments Wage Subsidy, a new GL ID will need to be created. 

Setup

As the funds are coming in just prior to the end of the Financial Year is it recommended that it is added to the Liability section of the Financial Chart.

Duplicate your Wages Control account and call it Wages Subsidy.

The Function is a Current Liability and it is GST Exempt.  Link it to the Sub Account of the Total Liabilities.

Payment Receipt

When the payment is received, a Cashbook receipt will be created.  Using the new GL Code, enter the amount received on the correct date.

When processing the wages, the value of the wages subsidy will be processed against the new liability account and the remainder of the salary costs will be processed against the normal wages expense account.

For example

An employee earns $1000 gross

They are paid wages subsidy at $585.80 and the balance as normal salary, both are taxable, so the employee still receives the same net wage and pays the same amount of tax. 

The end result is that the profit and loss will show reduced wages for each of the three months from March, April and May, during which time the balance of the subsidy will reduce in the Current Liabilities each month so at the end of May this figure will be zero.

For further clarification please contact your Accountant.