Tax-free government money to combat COVID-19?
Recent changes are outlined below:
July 1, 2022
- Loss carry back for eligible companies extended to cover 2023 income year.
- Professional firm profits diverted to the professional's spouse or other associates to be reviewed under new Tax Office guidance.
- Corporate collective investment vehicle legislative regime introduced.
- Temporary full expensing of depreciating assets extended to include 2023 income year.
- Depreciable assets of a company joining a tax consolidation group have tax costs setting rules modified for assets depreciated under temporary full expensing rules.
December 9, 2021
- Reduced Pandemic leave disaster payment of $750 per week made available through to 30 June 2022.
August 5, 2021
- COVID-19 Disaster Payments are non-assessable non-exempt income in 2021 income year and later. Payments phasing out as vaccination rates increase.
July 1, 2021
- New Investment Engagement Service launched for businesses planning significant new investments in Australia.
- Tax Office small business independent review service made permanent for businesses with turnover < $10m, for income tax, GST, exercise, luxury car tax, wine equalisation tax and fuel tax credits. Requested before amended assessment issued.
- Small business income tax offset for individuals increased to provide a reduction of 16% for a tax payable up to $1,000.
- Self-managed superannuation funds can now have six members, increased from four members previously.
July 1, 2021
- Some COVID -19 state and territory business grants received by small and medium enterprises are non-assessable, non-exempt income for 2021 and 2022 income years.
- Certain state, territory and local government financial support for individuals and businesses suffering COVID-19 impacts made exempt where businesses have turnover less than $50 million and only in eligible programs.
March 31, 2021
- JobKeeper payments scheme ended.
October 5, 2020
- Boosting apprenticeship commencements subsidy (up to 50% of apprentice's wages) is assessable income.
June 4, 2020
- Homebuilder grant for new home or substantial renovation construction is not subject to income tax.
April 1, 2020
- COVID-19 cash flow boost payments are not subject to income tax
State, territory, and the Commonwealth governments are now in the process of providing tax-free grants to businesses to support them during lockdowns imposed to protect public health from the pandemic. Usually, government grants to support the ongoing operations of a business are assessable income.
With the COVID-19 pandemic, Victoria, NSW, the ACT, to a lesser extent, Queensland and the other locations have all been subject to community and business lockdowns that have decimated business revenues and caused significant losses.
Late last year, Victoria agreed with the Commonwealth to provide tax-free business grants during its extended lockdown. Parliament amended the 97 Tax Act to make eligible state and territory grants non-assessable, non-exempt income for tax purposes. With the long-running, current lockdown in NSW, the use of those rules has expanded to NSW and potentially, in the future, to the other states and territories. Also, legislation recently passed to make eligible Commonwealth pandemic business grants tax-free.
The conditions that apply for that tax-free status include:
- The Treasurer must declare that the grant program is eligible
- The business receives the state or territory grant during the 2021 or 2022 tax years
- For Commonwealth grants, the business must receive the funds in the 2022 tax year
- The business and its associated entities must have an aggregated turnover of less than $50 million
The Treasurer can declare a grant program eligible if it responds to the pandemic’s economic impact and supports business operations that a public health direction has disrupted and has made that declaration for these programs so far:
VictoriaAlpine Resorts Support Program (Streams 1, 2 and 3) Business Continuity Fund Business Costs Assistance Program Round Two – July Extension Business Support Fund 3 Licensed Hospitality Venue Fund Licenced Hospitality Venue Fund 2021 – July ExtensionMelbourne City Recovery Fund—Small business reactivation grants Outdoor Eating and Entertainment PackageSmall Business COVID Hardship Fund Sole Trader Support Fund New South Wales2021 COVID-19 business grant 2021 COVID-19 JobSaver payment 2021 COVID-19 micro-business grant NSW Performing Arts COVID Support Package
You can get more information about pandemic business grants at the following web locations:
Queensland https://www.business.qld.gov.au/starting-business/advice-support/grants/covid19-support-grants NSW https://www.service.nsw.gov.au/transaction/2021-covid-19-business-grant Victoria https://www.coronavirus.vic.gov.au/business-grants-and-support ACT https://www.act.gov.au/business/business-support/covid-19-economic-support-for-business
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