Covid-19 Disaster payments since its inception on the 3rd June 2021 are now non-assessable, non-exempt income, thanks to recent passing of the Treasury Laws Amendment (COVID-19 Economic Response No. 2) Bill 2021.
Recipients of the COVID-19 Disaster Payments will therefore be able to take home more than they previously did with the JobKeeper wage subsidies, because this was taxed.
To break it down simply, the workers who lose 20 hours or more per week as a result of restrictions placed on a business due to Covid-19 health measures will receive $750 per week and those who have lost between 8 and 20 hours of work per week will be given $450.
Based on these figures, an annualised $39,000 income of $750 each week will be $90 better off with this COVID-19 Disaster Payment that is now tax free, compared with the JobKeeper wage subsidy.
This is a welcome relief to those struggling with the impacts to their household conditions and financial welfare as they are not able to earn an income because their place of work is unable to operate fully due to Covid-19 state lockdowns.
However, business support payments will only be tax-free if they are made under an eligible program and were received in the 2021-22 financial year. If a business goes through the usual means of acquiring support for their business and employees, then this will not be an issue, however if you are concerned, then please do get in touch with one of our knowledgeable accountants at ATS to ensure that you are following the correct protocol to benefit from these tax changes.
To be eligible for the concessional tax treatment, businesses must also have a turnover of less than $50 million.
The NSW’s JobSaver program which has recently expanded its support to businesses with an annual turnover of $250million will therefore be at odds with this tax-free exemption, so if you fall into this category, be aware of this conflict of interest.
The Bill also gives the Treasurer Josh Frydenburg powers to swiftly authorise additional COVID-19 payments to businesses affected by lockdowns between 1st July 2021 and 31 December 2022.
This move to ensuring that individuals receive more in their pocket each week by removing the tax associated with these support payments is just one of the ways that the government is proactively seeking ways to support communities and businesses affected by the ongoing health and economic impacts of the COVID-19 pandemic.
Contact Accounting Tax Solutions for more information or to talk to your accountant today on 07 5559 1200