UPDATED: Managing the COVID-19 Temporary 10% Wage Subsidy in QuickBooks

March 31, 2020

Due to the COVID-19 crisis, the Government of Canada has introduced a number of initiatives to assist businesses.  The types and terms of this assistance have proven to be dynamic, therefore the best source of current information on your business’ options can be found on the Canada website:

https://www.canada.ca/en/department-finance/economic-response-plan.html#businesses

One of the earlier subsidies announced was the Temporary 10% Wage Subsidy

To claim this subsidy, it must be deducted from your regular remittance for Payroll Source Deductions.  As such, special consideration needs to be taken in your QuickBooks company file.   When adjusting payroll remittances, there are three goals to keep in mind:

  1. Remit an accurate amount to the government for each month of payroll source deductions and employer portions.
  2. Ensure payroll records and year-end T4 reporting display all amounts in the correct fields.
  3. Affect appropriate accounts in your General Ledger and ensure your payroll liability account clears for each month.

QuickBooks Online

The folks at QuickBooks have added some amazing new tools which calculate the Temporary 10% Wage Subsidy for you and provide step-by-step instructions for managing the entries in your company file.  To access this information, open QuickBooks Online and on the side menu, select Taxes – Payroll Tax centre.  Click Learn More to access detailed instructions.

QuickBooks Desktop

  1. Create a new account in your Chart of Accounts to receive the Wage Subsidy amounts. 
    1. Type = Expense.  (Group or number this account to be with your other Payroll expense accounts)
    2. Account Name = COVID 10% Wage Subsidy.
    3. The other fields are optional.
  2. Adjust your payroll liabilities:
    1. Go to Home Screen – Pay Liabilities.
    2. Select Adjust Liabilities icon:
    3. Date/Effective Date = Enter the Same date as the paycheques (i.e. the Pay Date) for the pay period you are claiming subsidy for. We recommend a separate entry for each pay period, so if you have a bi-weekly pay period, use this method to record a separate subsidy entry for every bi-weekly pay period.  
    4. Adjustment is for = Company.
    5. [Disregard warnings after the next few steps about using an Employee payroll item with a Company adjustment].
    6. Item name = Federal Taxes.
    7. Amount = Enter the Wage subsidy amount claimed for the pay period, as a negative amount.
    8. Memo = COVID – 19 Temporary Wage Subsidy.
    9. Before accepting your entry, select the Accounts Affected icon and ensure that Affect liability and expense accounts is selected – then OK to return to the entry.
    10. Click OK to save your entry.
    11. When prompted to select an Expense, Asset or Liability account to affect, select the new account created in Step 1: COVID 10% Wage Subsidy.
  3. Pay your payroll liabilities as usual, using the Pay Liabilities feature. Note that your remittance has been reduced by the adjustment you entered above.

Michele Craig is the founder of Booksmarts, Central Ontario’s leading supplier of QuickBooks & QuickBooks Online Accounting Training.

A self-professed ‘accounting geek’, Michele is a Chartered Professional Accountant and Certified Management Accountant with over 25 years of experience in implementing and managing accounting systems. She is a certified trainer for adults, a Certified ProAdvisor for QuickBooks and QuickBooks Online and a member of the Wave Pro Network.

Contact her today at 705-796-6979 for a no-obligation consultation.

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