The company should remember the important aspects of accounting and taxation of transactions for training the employees at its own expense and taking care to improve their professional level.
Reflection of expenses in account
The costs of training, studying, retraining or advanced training should be accounted for in accordance with Accounting Standards 16 “Expenses” as costa of the current period.
Depending on the area in which the student works, you should reflect such expenses on accounts 91 “General Production Costs”, 92 “Administrative Expenses”, 93 “Expenses on Sales”, 94 “Other Operating Expenses”.
When a company pays for an employee’s training for more than a month (for example, a fee is paid for a semester or a year), keep an accounting of such expenses using the account 39 “Expenses of future periods”: reflect the amount of the previous payment for the training under the debit, under the credit - the cancellation of a part of such expenses in the costs of the reporting period.
Let’s consider an example.
Example. Accounting for the expenses of training of Deputy Chief Accountant
The cost of professional training of Deputy Chief Accountant during the year is UAH 25 000 (two semesters for five months). The cost of training is paid by the company.
|
No. |
Content of the economic transaction |
Accounting |
Amount, UAH |
|
|
Dr |
Cr |
|||
|
1 |
Made previous payment for the entire period of training |
371 |
311 |
25 000 |
|
2 |
Reflected expenses for future periods |
39 |
371 |
25 000 |
|
3 |
Written off as expenses of the period the training costs for the current month (UAH 25 000 ÷ (5 months × 2 semesters)) |
92 |
39 |
2500 |
Taxation of study expenses
Income Tax
Expenditure on training of employees is to be recognized according to the rules of Accounting Standards 16. Costs when determining the object of taxation of the income tax are recognized on the basis of primary documents confirming the costs incurred for payment of training. Transactions related to the payment of training employees do not need to adjust the financial result before taxation.
VAT
The training services are not the subject to VAT taxation (para. 197.1.2 of the Tax Code of Ukraine; TCU).
PIT and War Tax
It should not be included to the total taxable income of an employee the funds that the company has paid to a higher educational institution for the training of an individual - in an amount not exceeding the three times the minimum wage established on January 1 of the reporting (tax) year for each full or incomplete month of such training (para. 165.1.21 of TCU). In 2018 this amount is UAH 11 169 (UAH 3 723 × 3). Such a tax amount should not be taxed by the war tax.
The cost of training that exceeds the specified amount should be taxed by the PIT and the war tax on a general basis.
Untaxed income should be reflected in the form No. 1DF with the sign “145”, and the amount included in the total taxable income - with the sign “126”.
If the employer paid for the education of a worker by a single amount, while its size does not exceed three times the minimum wage for each full or part-time training month, this amount is also not taxable (ZIR, category 103.02).
USC
The expenses for the payment for the training of employees in higher educational institutions should not be included in the base for calculation of the USC (para.9 of sec. II of the List of types of payments carried out at the expense of employers for which it is not accrued the unified contribution to the compulsory state social insurance, approved by the decision of the Cabinet of Ministers of Ukraine dated December 22, 2010 No. 1170).
