Is your business grant taxable or not?
The Covid-19 pandemic has presented us with an array of unprecedented challenges for many of our small businesses. They have been disproportionately impacted due to their prevalence in industries hardest hit by mandated lockdowns. In response, the government has provided support for eligible businesses in the form of several tax concessions and business grants to get them back on their feet. The purpose of this article is to highlight the tax treatment of these government grants when it comes to reporting in your 2022 financial year tax return.
Covid-19 business grant will not be taxable if you meet the following criteria:
- The payment is received under a state or territory grant, or Australian Government support program that is formally declared by the minister, under a legislative instrument, to be treated as non-assessable non-exempt (NANE) income.
- You carried on a business and have an aggregated turnover of less than $50 million in either the income year the payment was received or the previous income year.
- The payment was received in FY2021 or FY2022 for eligible states or territories or FY2022 for eligible Australian Government Programs.
2 Types of Government Grants/ Support Programs that may be non-taxable (NANE)
- State and Territory Grants relating to the recovery from COVID-19
- Australian Government support payments established under Covid-19 Business Assistance Program
The following are eligible for non-assessable non-exempt income (NANE) treatment:
- COVID-19 Business Support Grant (29 July – 30 September 2021)
- COVID-19 Additional Business Support Grant (13 August – 17 October 2021)
- COVID-19 Tourism and Hospitality Grant (17 September – 31 October 2021)
- COVID-19 Business Hardship Grant (17 September – 31 October 2021)
If you’re still unsure about any of these guidelines or have any other concerns, please contact us here at LINK.