Media: What income to exclude in your business’ assessable income
http://tv.ato.gov.au/ato-tv/media?v=bi9or7odhi1hgzExternal Link (Duration: 01:16)
Non-assessable amounts
If an amount or payment you receive is not assessable income, you don't need to include it in your tax return.
Examples of amounts that are not assessable:
- betting and gambling wins (unless you operate a betting or gambling business)
- earnings from a hobby
- gifts or inheritance
- GST you have collected
- non-assessable non-exempt government grants
- prizes and awards not related to your business
- money you have borrowed
- money you contribute as the business owner.
Non-assessable non-exempt government grants
Some business support grants are non-assessable, non-exempt (NANE) income. If a business support grant you receive is NANE, you do not include it in your tax return and you do not pay tax on it.
NANE grants include:
- COVID-19 business support payments
- Natural disaster grants
- Water infrastructure improvement payments
COVID-19 business support payments
You don't need to pay tax on some COVID-19 payments from the government to support businesses. Eligible payments will be NANE income for tax purposes if you meet the criteria.
For more information, see Eligible COVID-19 business grants and support programs.
Example: Receiving a grant eligible for NANE income
Fresh Brew is a small business operating a café in Victoria.
Fresh Brew received an eligible grant payment under Business Costs Assistance Program Round Two for the 2020–21 financial year.
This package is part of the Victorian Government's response to the economic impacts of COVID-19.
The Minister has declared that the Business Costs Assistance Program Round Two is a grant program that's eligible for NANE income.
In the 2020–21 financial year, Fresh Brew self-assessed and identified that its aggregated turnover was less than $50 million in the income year the payment was received.
As Fresh Brew received an eligible grant payment in the 2020–21 financial year and its aggregated turnover is less than $50 million, it does not need to include the grant in its business income.
End of exampleFor more information, see tax implications of government grants or payments you receive as a result of COVID-19.
Natural disaster grants
If your business has been affected by a natural disaster, you may receive a government support grant or payment to help you recover. These payments are counted as assessable income unless they are made non-taxable by parliament.
For more information, see Disaster support grants and deductions for business.
Water infrastructure improvement payments
You can choose to treat payments received for sustainable rural water use and infrastructure programs as NANE income or ordinary income.
For more information on the choice options and eligible programs, see Sustainable rural water use and infrastructure program.