The federal and Victorian governments have reached an agreement to make the grants to small and medium businesses under Victoria’s Business Resilience Package exempt from income tax.
The $3 billion grant package, announced earlier this month, provides up to $20,000 in grants to businesses with a payroll of up to $10 million.
Sole traders within specific sectors are also able to apply for a grant of up to $3,000.
Licensed hospitality businesses can access grants of up to $30,000, while alpine businesses are set to receive $20,000 to help them cover their ski resort fees.
While government support payments to businesses are generally assessable, the new agreement between the Commonwealth and Victoria “recognises the exceptional circumstances Victorian businesses face” as they continue to wait to return to work under the state’s reopening roadmap.
The tax exemption will be time-limited for grants paid until 30 June 2021.
Moving forward, the federal government will extend the income tax exemption arrangement to all other states and territories on an application basis, meaning previous various state grants continue to be assessable.
“Eligibility would be restricted to future grants program announcements for small and medium businesses facing similar circumstances to Victorian businesses,” said Prime Minister Scott Morrison.
Victorian Premier Daniel Andrews’ latest revision to the state’s reopening roadmap means the scheduled major step for most businesses to reopen on 26 October will now likely be brought forward by a week.
The last step to reach “COVID normal” will also no longer be defined by a calendar date but will require zero new cases in the community for more than 14 days.
Jotham Lian is the editor of Accountants Daily, the leading source of breaking news, analysis and insight for Australian accounting professionals.
Before joining the team in 2017, Jotham wrote for a range of national mastheads including the Sydney Morning Herald, and Channel NewsAsia.