June 8, 2020
We’ve had quite a few questions come through about the taxing of COVID19 Government Support payments.
“I thought it was tax free!” was the first response we hear from many clients, friends and associates.
As outrageous as it is to be taxed on free money, it’s necessary for some of these payments to be taxed under their ordinary income classification.
We’ve summarized the most common payments received and their tax impact.
| Subsidy Received | What is it | Is it Taxable | Why or why not |
| JobKeeper | A business wage subsidy to continue paying their employees: a fortnightly payment of $1,500 per eligible employee from 30 March 2020, for a maximum of six months. | Yes | The payment is taxable to the business owner, however it is offset against wages paid. If you are an employee, this forms part of your gross wages and is also taxable |
| Victorian Government Business Support Fund | A grant which can be used towards costs such as utilities, rent and salaries, and activities to support business continuity planning | Yes | As this grant is for business operations, it can be expected that the income will be offset by operational expenses the business wasn’t able to fund. |
| Boosting Cashflow for Employers | Payments received are credits for PAYG Withholding. | No | This income is classed as Non-Assessable, Non-Exempt (NANE), meaning no tax is due. |
| Payroll Tax Credits | Businesses with annual taxable wages up to $3 million will have their payroll tax for the 2019-20 financial year waived, giving $550 million back to businesses who need it | No | This is a reimbursement of payroll tax already paid, and as a result, the refund reduces the payroll tax expenses. |
If you have a particular question regarding your tax position and how any of the above will impact you, we can be reached here.
Also, don’t forget to visit our Instagram (here) for more tax tips and all things accounting – we make it exciting (or as exciting as it can be!).
