Individuals are not subject to income tax on COVID-19 disaster payments received during income years 2020-21 and later.
The Treasury Laws Amendment Act (COVID-19 Economic Response No 2) Bill 2021 has been tabled in the House of Representatives proposing an amendment to the tax law to treat the disaster payments as non-assessable non-tax-exempt (NANE) income.
The bill also includes the following changes:
• The Treasurer has the power to approve additional Commonwealth payments between July 1, 2021 and December 31, 2022 to those affected by state or territorial lockdowns in response to the pandemic
Payments to small businesses and businesses with sales less than $ 50 million under the Commonwealth-managed COVID-19 business support programs will also be NANE revenue. Payment must be made under a program that has been declared eligible by the Treasurer and must be received in the 2021/22 financial year. Note that there is an existing provision to exempt state or territory administered scholarship programs, with several Victorian scholarship programs so far declared eligible (see ITAA 1997 59-97).
• The disclosure of information to Australian government agencies is permitted under tax secrecy regulations governing COVID-19 business support programs, and
• Reintroduction of the Temporary Minister-in-Charge Mechanism to change the arrangements for information and documentation compliance under Commonwealth legislation in response to the challenges posed by COVID-19.
Source: Treasury Laws Amendment (COVID-19 Economic Response No 2) Bill 2021, Australian Parliament website, August 3, 2021, accessed August 3, 2021.