Tax-Free Newly Added COVID-19 Grants
The newly added Victorian grants have been declared by the Federal Government eligible to be non-assessable, non-exempt income, or NANE. These grants can be efficiently tax-free for business taxpayers who are qualified in the income year of receipt, and these cannot be offset against any tax losses.
Certain conditions are required in order for the Government COVID-19 business grant or support program to be qualified as NANE:
- The payment is received under a State or Territory grant or Australian Government support program officially declared by the Minister under a legislative instrument to be qualified for treatment as NANE income.
- The taxpayer carried on a business and had an aggregated turnover of less than $50 million either in the current or previous income year the payment was received.
- The payment was received in the 2020-21 or 2021-22 income year for eligible State or Territory grants, or in the 2021-22 income year for eligible Australian Government programs.
There are 2 types of government grant and support programs, under which COVID-19 payments to support businesses may be non-taxable (NANE):
- State and territory grants relating to the recovery from COVID-19
- Australian Government support payments established under the COVID-19 Business Assistance Program.
Most recently declared Victorian and ACT grant programs declared as eligible are:
– Business Cost Assistance Program Round Two — Top Up
– Business Cost Assistance Program Round Three.
– Business Cost Assistance Program Round Four.
– Business Cost Assistance Program Round Four — Construction.
– Business Cost Assistance Program Round Five.
– Commercial Landlord Hardship Fund 3.
– Impacted Public Event Support Program Round Two.
– Licensed Hospitality Venue Fund 2021 – Top Up Payments.
– Live Performance Support Program (Presenters) Round Two.
– Live Performance Support Program (Suppliers) Round Two.
– HOMEFRONT 3.
Not all grants or support programs announced by the government are qualified to be treated as Non-assessable non-exempt income or NANE.
The grant or support program payment is taxable if you:
- Carried on a business and
- Has an aggregated $50 million or more turnover in either the current or previous income year in which the payment was received.
The payment will be assessable as ordinary income on the business and should be declared as such in your tax return.
We are here to assist you. Contact us now.
Yan (Jenny) Qi CA
Founder of Progress CA Pty Ltd
Tel. no. 0403 050 779