Important tax considerations for businesses that have received government support payments.
Rules and thresholds can change. This article is general information and should be checked against current official guidance and your specific circumstances.
Start with the specific payment
The tax treatment of a government grant or support payment depends on the program and the circumstances in which it was received. Many business payments are assessable income, while some are specifically exempt or non-assessable non-exempt income.
Match the accounting and tax records
Record the payment separately, retain the approval letter and program terms, and identify the period and purpose of the assistance. This helps your accountant determine the correct tax-return and financial-statement treatment.
Consider GST and timing
GST treatment and the income year in which a payment is recognised can vary. The answer may depend on the payment terms and whether the business uses cash or accrual accounting.
Keep evidence
Retain applications, correspondence, bank records and calculations. Seek advice for the specific program rather than assuming that all grants or support payments receive the same treatment.
