Corona Tax?

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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 ReceivedWhat is itIs it TaxableWhy or why not
JobKeeperA 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.YesThe 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 FundA grant which can be used towards costs such as utilities, rent and salaries, and activities to support business continuity planningYesAs 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 EmployersPayments received are credits for PAYG Withholding.NoThis income is classed as Non-Assessable, Non-Exempt (NANE), meaning no tax is due. 
Payroll Tax CreditsBusinesses 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 itNoThis 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!).

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