Wage Subsidies

[damberger]

So, my employee received a government "award" for $4500 which goes towards to her wages. I pay it out of pocket, as an employer, and at the end of her contract, the government reimburses me for that award.

Is that considered income and should be accounted as such? I feel like it should be as it is a benefit to me as an employer, but at the same time the award is under my employee's name, not mine.

[nealrm]

Are you saying that the Government has you pay your employee $4500 in extra wages they you get back from the government at the end of the contract?

That would be income for the employee and also for you.

Seems like an odd award.

[tallen]

Which government? I can't imagine the United States federal government having a program like this without abundant red-tape that would make it clear (as mud?) how the "award" should be accounted for. Maybe one of the states, or a local government? Or is this in another country?

[damberger]

Which government? I can't imagine the United States federal government having a program like this without abundant red-tape that would make it clear (as mud?) how the "award" should be accounted for. Maybe one of the states, or a local government? Or is this in another country?

This is for the Canadian government. NSERC – Experience Awards (http://www.nserc-crsng.gc.ca/Students-Etudiants/UG-PC/Experience-Experience_eng.asp). :)

[damberger]

Are you saying that the Government has you pay your employee $4500 in extra wages they you get back from the government at the end of the contract?

That would be income for the employee and also for you.

Seems like an odd award.

Yeah, here is the link if you want to take a look for yourself. NSERC – Experience Awards (http://www.nserc-crsng.gc.ca/Students-Etudiants/UG-PC/Experience-Experience_eng.asp). Essentially yeah, my employee is the recipient of the award, not me. The award is addressed to her. As a condition of the award, we have to give her a FT job for 4 months and the $4500 award helps subsidize her wages. (We need to add at least 25% of the award as her wage). Once the contract is up, I get a reimbursement back from the government.

But yeah, not exactly sure how to do the bookkeeping for this. Cause it's not necessarily income in the sense that I sold my services/goods.

[tallen]

Reading the FAQ: You pay the student, per your payroll process, and issue an income statement (T 4 or T4A) to the student at the end of the year. Presumably you would account for these payments as wage expenses related to the R&D project that the student is working on for you.

I would guess that the reimbursement (once received) would be accounted for as an offset to your wage expense related to the R&D project. Not income to you really, but essentially a "negative" wage -- a reduction in your wage expense for that project....

But if you have questions, why not ask NSERC how they suggest you (as a host organization) handle the accounting?