Do you need to pay tax on COVID-19 financial support payments that you receive?
There are a number of different schemes providing government help for businesses affected by the COVID-19 pandemic.
If you receive assistance (whether from the Commonwealth or a State or Territory government), you may be wondering if you need to pay tax on the assistance. Here is what the ATO website advises.
|
Assistance
|
Income tax treatment |
GST treatment |
| COVID-19 Disaster Payment | Not taxable | N/A
|
| JobKeeper | Taxable – but amounts paid to employees that are subsidised by JobKeeper are deductible (see below)
|
No GST |
| Pandemic Leave Disaster Payment
|
Taxable | N/A |
| Small business support payments
|
See below | No GST |
| Child Care Transition Payment
|
Taxable | No GST (GST-free supply) |
| Creative Economy Support Payment
|
Taxable | No GST |
| Creative Economy Concessional Loan
|
Not taxable | No GST |
| Consumer Travel Support Program Grant
|
Taxable | No GST |
| State Government Voucher Subsidy Scheme Payment
|
Taxable | GST payable |
| Electricity rebate | Not taxable – but rebate reduces a business’ deduction for electricity
|
No GST |
Small business support payments
Government payments to assist a business to continue operating are generally taxable, whether provided as a one-off lump sum or a series of payments.
However, payments made under the COVID-19 business support programs listed below (eligible programs) are not taxable (they are what’s called non-assessable non-exempt (NANE) income) if the recipient’s aggregated turnover in the year they receive the payment is less than $50 million.
NSW support programs
- 2021 COVID-19 Business Grant
- 2021 COVID-19 JobSaver Payment
- 2021 COVID-19 Micro-business Grant
- NSW Performing Arts COVID Support Package.
Victorian support programs
- Alpine Business Fund
- Alpine Resorts Support Program (Streams 1, 2 and 3)
- Business Continuity Fund
- Business Costs Assistance Program Round Two
- Business Costs Assistance Program Round 2 – July Extension
- Business Support Fund 3
- Impacted Public Events Support Program
- Independent Cinema Support Program
- Licensed Hospitality Venue Fund
- Licensed Hospitality Venue Fund 2021
- Licensed Hospitality Venue Fund 2021 – July Extension
- Live Performance Support Program
- Melbourne City Recovery Fund – Small business reactivation grants
- Outdoor Eating and Entertainment Package
- Small Business COVID Hardship Fund
- Sole Trader Support Fund
- Sustainable Event Business Program.
Other support programs
If you receive a government support payment that is not listed above, then it is taxable (at least as at 25 August 2021). This includes:
- QLD: 2021 COVID-19 Business Support Grant
- ACT: COVID-19 Business Support Grant
- SA: COVID-19 Additional Business Support Grant
- TAS: Business Hardship – Border Closure Critical Support Grant
- WA: Tourism Business Survival Grants and payments under the Tourism and Travel
- NT: Payments under the Territory Business Lockdown Payment Program.
However, the Federal Government may declare any such payments to be non-taxable (by declaring the relevant program to be an eligible program).
Repayments of JobKeeper overpayments
If your business:
- has repaid or is repaying JobKeeper overpayments, the amount need not be included as assessable income in the business’ tax return. If the overpaid amount has already been included in an earlier tax return, the return will have to be amended to reduce the assessable income by the repaid amount;
- doesn’t need to repay JobKeeper overpayments because the ATO has waived them, the overpaid amounts have to be included as assessable income in the business’ tax return.
Payroll tax relief
Where:
- no payroll tax is payable – the business will have a smaller allowable deduction in their tax return;
- a refund of payroll tax is paid – the allowable deduction for payroll tax will be less any refunds given.
There are no GST consequences.
Rent relief
If a business receives rent relief, its deduction for rent will be reduced. If the business is registered for GST, its entitlement to GST credits is reduced in proportion to the rent reduction.
Land tax relief
Land tax relief will result in a smaller allowable deduction. GST is not payable on the relief, but the GST payable on rent received by the landowner is reduced in proportion to the rent reduction given to the tenant.
Tip! Check with CMA Accounting and Taxation Services as to whether specific support government payments are taxable.
Summary of State and Territory 2021 COVID-19 financial support measures available to businesses
Since the onset of the COVID‑19 pandemic, the Federal Government has been working with States and Territories to provide financial assistance to businesses affected by lockdowns and restrictions in COVID‑19 hotspots.
There is a raft of new measures – many of which are helpful, but at the same time, confusing and convoluted – making it challenging to keep abreast of what’s available.
To help you navigate the 2021 COVID-19 financial support measures that are currently available to businesses, here is a handy snapshot and summary of the assortment of support measures and comparisons to identify their similarities and differences.
Snapshot: Key business support measures on offer
The key business support measures currently on offer around the country are:
- NSW: COVID-19 Business Grant
- NSW: JobSaver
- NSW: Micro-business Grant
- NSW: Small business fees and charges rebate
- VIC: Small Business COVID Hardship Fund
- QLD: 2021 COVID-19 Business Support Grant
- ACT: COVID-19 Business Support Grant
- ACT: COVID-19 Small Business Hardship Scheme (opening soon)
- SA: COVID-19 Business Support Grant — July 2021
- SA: COVID-19 Additional Business Support Grant
- TAS: Business Hardship – Border Closure Critical Support Grant
- WA: Small Business Lockdown Assistance Grant: Round Two, June 2021
- NT: Territory Business Lockdown Payment Program – Lockdown (round 2) payment
Summary: State and Territory 2021 COVID-19 business support measures
This summary sets out the key features and conditions of the State and Territory COVID-19 financial support measures currently available to businesses across Australia.
The hyperlinked information for each measure will take you to the landing page where you can find guidance, terms and conditions, further information on eligibility and online application forms.
This information is current as at 11:00am on 26 August 2021.
|
NSW COVID-19 Business Grant
|
|
| Amount | $7,500 to $15,000
|
| Program open | 19 July 2021 to 13 September 2021
|
| Aggregated turnover | $75,000 to $50m in 2019–20 |
| Decline in turnover (DIT) | ≥ 30%, ≥ 50%, ≥ 70% in minimum 2-week period from 26 June 2021 to 17 July 2021
(27 May 2021 to 17 July 2021 for Southern Border businesses)
Compared with: · Same period in 2019 · Same period in 2020 · 12–25 June 2021
|
| Other key conditions | · Maintain 13 July 2021 headcount
· Wages no more than $10m · Business costs incurred from 1 June 2021 to 17 July 2021
|
| More information | Service NSW website |
|
NSW JobSaver
|
|
| Amount | · Employing: $1,500 to $100,000 per week
· Non-employing: $1,000 per week
|
| Program open | 26 July 2021 to 18 October 2021
|
| Aggregated turnover | $75,000 to $250m in 2019–20 |
| Decline in turnover (DIT) | ≥ 30% from 26 June 2021
Compared with: · Same period in 2019 · Same period in 2020 · 12–25 June 2021
|
| Other key conditions | · Maintain 13 July 2021 headcount
· Capped at 40% of NSW Weekly Payroll
|
| More information | Service NSW website |
|
NSW JobSaver extension for larger businesses in tourism, hospitality and recreation industries
|
|
| Amount | Aggregated annual turnover of:
· More than $250m to $500m: up to $300,000 per week* · More than $500m to $1b: up to $500,000 per week*
* Fortnightly payments will be backdated to the start of the month in which the business first experienced the required decline in turnover on or after the commencement of JobSaver on 18 July 2021.
|
| Program open | · Can apply from 26 August 2021 (backdated to 18 July 2021) to 18 October 2021
· Applications will be manually assessed
|
| Aggregated turnover | More than $250,000 to $1b in 2019–20 |
| Decline in turnover (DIT) | Aggregated annual turnover of:
· More than $250m to $500m: ≥ 50% · More than $500m to $1b: ≥ 70%
Minimum 1-month period within the lockdown (commenced 26 June 2021) compared with the same period in 2019 or another agreed period
|
| Other key conditions | · Maintain headcount from the day immediately prior to the month they first experienced the required DIT
· Capped at 40% of NSW Weekly Payroll
|
| More information | Service NSW website |
|
NSW Micro-business Grant
|
|
| Amount | $1,500 per fortnight
|
| Program open | 26 July 2021 to 18 October 2021 |
| Aggregated turnover | More than $30,000 to less than $75,000 in 2019–20 |
| Decline in turnover (DIT) | ≥ 30% from 26 June 2021
Compared with: · Same period in 2019 · Same period in 2020 · 12–25 June 2021
|
| Other key conditions | Maintain 13 July 2021 headcount |
| More information | Service NSW website |
|
NSW Small business fees and charges rebate
|
|
| Amount | $1,500 digital voucher
|
| Program open | April 2021 to 30 June 2022 |
| Aggregated turnover | — |
| Decline in turnover (DIT) | — |
| Other key conditions | · Wages no more than $1.2m
· Fees and charges from 1 March 2021 to 30 June 2022
|
| More information | Service NSW website |
|
Victorian Small Business COVID Hardship Fund
|
|
| Amount | $14,000
|
| Program open | Closes until earlier of exhaustion of program funds or 10 September 2021
|
| Aggregated turnover | — |
| Decline in turnover (DIT) | ≥ 70%
Minimum 2-week period from 27 May 2021 to 10 September 2021
Compared with: · Trading in 2019 — 27 May 2019 to 10 September 2019 · Not trading in 2019 — 1 February 2021 to 28 July 2021
|
| Other key conditions | · Victorian payroll no more than $10m in 2019–20
· Registered for GST on and from 28 July 2021
|
| More information | Business Victoria website |
|
Queensland 2021 COVID-19 Business Support Grant
|
|
| Amount | · Small: $10,000
· Medium: $15,000 · Large (tourism and hospitality businesses only): $30,000
|
| Program open | 16 August 2021 to 16 November 2021 |
| Aggregated turnover | More than $75,000 |
| Decline in turnover (DIT) | ≥ 30% Nominated 7-day period (must include at least 1 full day of a lockdown event)
Compared with: · Same 7-day period in July/August 2019 · Same period in July/August 2020
|
| Other key conditions | · Small: annual payroll less than $1.3m
· Medium: annual payroll $1.3m–$10m · Large: annual payroll more than $10m · Must be registered for GST
|
| More information | Business Queensland website |
|
ACT COVID-19 Business Support Grant
|
|
| Amount | · Employing: Up to $10,000
· Non-employing: Up to $4,000
|
| Program open | 26 August 2021 to 7 August 2021 |
| Aggregated turnover | More than $75,000 |
| Decline in turnover (DIT) | ≥ 30% over a consecutive period of 7 days during the 3-week lockdown period compared with a comparable 7-day period in April 2021 to August 2021
|
| Other key conditions | Must be registered for GST
Australian payroll must be less than $10m |
| More information | ACT Government website |
|
ACT COVID-19 Small Business Hardship Scheme
|
|
| Amount | Up to $10,000 in form of credit for:
· Payroll tax · Utilities · Rates · Range of business licence fees and charges
|
| Program open | Opening soon |
| Aggregated turnover | $30,000 to $10m |
| Decline in turnover (DIT) | ≥ 30% |
| Other key conditions | TBA |
| More information | ACT Government website |
|
SA COVID-19 Business Support Grant — July 2021
|
|
| Amount | · Employing: $3,000
· Non-employing: $1,000
|
| Program open | 29 July 2021 to 30 September 2021 |
| Aggregated turnover | $75,000 or more |
| Decline in turnover (DIT) | ≥ 30% in the week of 20 July 2021 to 26 July 2021 (inclusive) compared to the prior week
|
| Other key conditions | Must be registered for GST
Australian payroll must be less than $10m if employing |
| More information | SA Department of Treasury and Finance website |
|
SA COVID-19 Additional Business Support Grant
|
|
| Amount | · Employing: $3,000
· Non-employing: $1,000
Plus further $1,000 if operate from a commercial premise in the Adelaide CBD
|
| Program open | 13 August 2021 to 17 October 2021 |
| Aggregated turnover | No minimum turnover |
| Decline in turnover (DIT) | ≥ 30% over the 2 weeks from 28 July 2021 to 10 August 2021 compared to average fortnightly turnover in the June 2021 quarter
|
| Other key conditions | Must be registered for GST
Australian payroll must be less than $10m if employing |
| More information | SA Department of Treasury and Finance website |
|
Tasmanian Business Hardship – Border Closure Critical Support Grant
|
|
| Amount | · Sole traders/Small: $2,000
· Small employing: $5,000 · Medium: $10,000
|
| Program open | 17 August 2021 to 16 September 2021 |
| Aggregated turnover | · Sole trader/Small: $50,000 or more
· Small employing: More than $100,000 to $1m · Medium: More than $1m to $10m
|
| Decline in turnover (DIT) | ≥ 30% from 26 June 2021 to 13 August 2021
Compared with 8 May 2021 to 25 June 2021
|
| Other key conditions | Registered ‘for tax purposes’ |
| More information | Business Tasmania website |
|
WA Small Business Lockdown Assistance Grant: Round Two, June 2021
|
|
| Amount | $3,000
|
| Program open | Closes 31 August 2021 |
| Aggregated turnover | $75,000 or more |
| Decline in turnover (DIT) | ≥ 30% from 29 June 2021 to 5 July 2021
Compared with prior week
|
| Other key conditions | · Must be registered for GST
· Australian payroll must be less than $4m · Specified industries for Perth, Peel and Rottnest regions
|
| More information | WA Small Business Development Corporation website |
|
NT Business Lockdown Payment Program – Lockdown (round 2) payment
|
|
| Amount | · Lockdown payment 1: $1,000
· Lockdown payment 2: $1,000 · Extended closure payment for eligible businesses: $1,000
|
| Program open | · Lockdown payment 1: 28 June 2021 to 20 August 2021 (closed)
· Lockdown payment 2: 17 August 2021 to 27 August 2021
|
| Aggregated turnover | $75,000 to less than $10m |
| Decline in turnover (DIT) | ≥ 50% |
| Other key conditions | Must have a valid ABN
Fewer than 20 full-time equivalent employees |
| More information | Business Recovery Northern Territory website |
Common exclusions
- Businesses located or operating outside of the relevant State or Territory
- Businesses such as sole traders who are eligible to receive the Commonwealth Disaster Payment
- Businesses for which the primary or only (varies between States) source of income is passive (rent, dividends, interest)
- Eligible for another business grant.
Use of business grant funds
- Meeting business costs, including utilities, salaries, rent
- Seeking financial, legal or other advice to support business continuity planning
- Developing the business through marketing and communications activities
- Other supporting activities related to the operation of the business.
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| TaxWise® News is distributed by professional tax practitioners to provide information of general interest to their clients. The content of this newsletter does not constitute specific advice. Readers are encouraged to consult CMA Accounting and Taxation Services for advice on specific matters. |