Employment income (E.G Salary) when received or when earned? AND employment expense (e.g. salary) when incurred or when paid

Question

1695 viewsSeptember 2, 2020Business Tax

0

Hudati (anonymous) Posted August 29, 2020

Hi Allan,

Hope all is good with you!

I am the owner manager of my corp, I got my December 2019 salary in my personal bank in Jan 2020.

Shall follow the accrual or cash basis:

1. can my corp deduct Dec salary expense based on accrual or it is wrong and should be deducted when paid only?

2. can I report the salary in my 2019 T1 or you think it should be part of my 2020 T1 they year I received it thanks

Huda

1 Answer

score 0 · Answer 1 · 2020-09-02T19:47:20+00:00

Your company must follow the accrual basis of accounting. Therefore, because the salary became payable in December 2019, your company must claim a tax deduction for the 2019 tax year. However, individual taxpayers must follow the cash method when it comes to the taxation of salary. This means that the salary payment you received in January 2020 will be taxable to you in the 2020 tax year. Note: payroll taxes must be deducted at the time salary/wages are paid to you.

Employment income (E.G Salary) when received or when earned? AND employment expense (e.g. salary) when incurred or when paid

1 Answer

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