How do I account for the 50% non-deductible expenses on Meals in my accounting software and in T2?
Is it considered “loss” in equity?
Consider the following example:
While closing the year we notice:
Gross taxable income: 50,000$
Reimbursement for employees on Meal Expenses: 2000$, of which:
– 1000$ is deductible
– 1000$ is non-deductible (but was still paid to employees)
To Determine the Net Taxable Income, we:
– Subtract the total deductible expenses (1000$) from the gross taxable income.
So we get 49,000$.
So far so good.
But what about the outstanding non-deductible portion?
It’s an expense, but not a deductible one.
So is this considered to be a loss in Equity?
So that I adjust it in the end of the year – and report it in the Balance Sheet Under “Retained Earnings Information”?
3740 other items affecting Retained Earnings
If not, what’s the alternative?
thanks for your help!