Add a Government subsidy workpaper

1. On the Workpapers page, click New Workpaper and select Government subsidy. 
2. Enter the government subsidy income.

A Government subsidy workpaper can also be added to an Income Statement account if the individual has a trial balance. 

Government subsidy received from a Partnership or Look-through Company

In some situations, government subsidies will be part of Other income distributed from a partnership or look-through company to an individual partner or shareholder.

In the distributor (partnership or look-through company), this income is classified as Other income for the purposes of the distribution.

In the recipient (individual), the income remains classified as Other income when the distribution received is created automatically in TaxLab.

Inland Revenue requires the government subsidy portion of the distribution received to be declared separately to the income from the partnership or look-through company.

Separating Government subsidy income from distributions received

When a distribution has automatically come into an individual from another entity in TaxLab, it is not possible to edit this distribution.

To re-allocate income from being partnership or look-through company income to being government subsidy income, follow the steps below.

1. On the Workpapers page, click New Workpaper and select Partnership income or Look-through company income (match the type of entity the distribution came from).
2. Enter a loss equal to the amount of government subsidy income that was distributed.
3. On the Workpapers page, click New Workpaper and select Government subsidy.
4. Enter the amount of government subsidy income that was distributed.

Overall, the total income in the individual is the same but it is now split in the tax return between government subsidy and income from the partnership or look-through company.