The declaration comes after legislation was passed earlier this month to allow the Treasurer to decide which state and territory business support programs would be eligible for non-assessable non-exempt (NANE) income status.
Under the new law, payments will be treated as NANE income if they were made under an eligible program, received in the current financial year, and were received by a business with an aggregated turnover of less than $50 million.
Mr Frydenberg has now declared that four NSW grant programs will be eligible for the NANE income treatment:
- the 2021 COVID-19 business grant;
- the 2021 COVID-19 JobSaver payment;
- the 2021 COVID-19 micro-business grant; and
- the NSW Performing Arts COVID Support Package.
The inclusion of JobSaver payments as NANE income will likely require urgent guidance from the ATO, due to a turnover threshold difference between the law and the program, said Chartered Accountants Australia and New Zealand tax leader Michael Croker.
NSW’s JobSaver program currently allows businesses of up to $250 million in annual turnover to receive payments, but the new law only provides NANE income treatment to payments made to small entities with a turnover of less than $50 million.
“This is a deliberate policy decision by the Federal government,” said Mr Croker. “So there will be recipients of JobSaver which won't receive NANE treatment and will have the amount included in their assessable income.”
“I fear that some business operators may not appreciate this, thinking that JobSaver is always 'tax-free' because that's what the PM said on Sunrise. Some might have trouble finding the money to pay the tax once the tax return is lodged.”
Five Victorian business support programs have also been declared as eligible grant programs:
- the Alpine Resorts Support Program (Streams 1, 2 and 3);
- the Business Continuity Fund;
- the Business Costs Assistance Program Round Two - July Extension;
- the Licenced Hospitality Venue Fund 2021 – July Extension; and
- the Small Business COVID Hardship Fund.
The new law also provides individuals receiving COVID-19 Disaster Payments with tax-free payments, meaning workers who lose 20 or more hours of work a week will receive the full $750 a week, while those who lose between eight and 20 hours will receive $450.
View the Income Tax Assessment (Eligible State and Territory COVID-19 Economic Recovery Grant Programs) Amendment Declaration (No. 2) 2021 here.