Income Tax Assessment (Eligible State and Territory COVID-19 Economic Recovery Grant Programs) Amendment Declaration (No. 5) 2022

Administered by Department of the Treasury

Legislation au F2022L01477 Not in force Legislative Instrument

Legislation content

EXPLANATORY STATEMENT

Issued by authority of the Treasurer

Income Tax Assessment Act 1997

Income Tax Assessment (Eligible State and Territory COVID-19 Economic Recovery Grant Programs) Amendment Declaration (No. 5) 2022

Subsection 59-97(3) of the Income Tax Assessment Act 1997 (the Act) provides that the Treasurer must, by legislative instrument, declare a grant program an eligible program for the purposes of section 59-97 of the Act if the Treasurer is satisfied that:

•                 the program was first publicly announced on or after 13 September 2020 by the State, Territory or state or territory authority administering it;

•                 the program is, in effect, responding to the economic impacts of Coronavirus;

•                 the program is, in effect, directed at supporting businesses who are the subject of a public health directive applying to a geographic area where the business operates, and whose operations have been significantly disrupted as a result of the public health directive; and

•                 the State, Territory or state or territory authority has requested the program be declared.

The purpose of the Income Tax Assessment (Eligible State and Territory COVID-19 Economic Recovery Grant Programs) Amendment Declaration (No. 5) 2022 (the Declaration) is to declare an additional grant program administered by the Australian Capital Territory as an eligible program for the purpose of section 59-97 of the Act, under which a payment received in the 2020-21 or 2021-22 financial year by a small business entity (as defined in that provision) from an eligible program is non‑assessable non-exempt income.

As part of ongoing responses to the Coronavirus pandemic, governments of States and Territories provided grants to certain businesses to help them manage the impacts of the pandemic on their business. The Act provides that payments received by eligible businesses under grant programs, which have been declared as eligible programs by the Treasurer, are non-assessable non-exempt income. The effect of this is that these payments are not subject to income tax by the Commonwealth.

The Declaration declares the grant program as an eligible program, enabling payments received under the program to be treated as non-assessable non-exempt income and not be subject to income tax by the Commonwealth.

The Act specifies no conditions that need to be met before the power to make the Declaration may be exercised, other than the matters for which the Treasurer must be satisfied, which are detailed above. The Treasurer was satisfied that the declared programs satisfied the requirements as set out in the Act.

Consultation was undertaken with the government of the Australian Capital Territory, whose program has been declared in the Declaration.

Details of the Declaration are set out in Attachment A.

The Declaration is a legislative instrument for the purposes of the Legislation Act 2003. It is not exempt from sunsetting and disallowance.

The Declaration commenced on the day after registration.

The Office of Best Practice Regulation considers that the proposal is unlikely to have a more than minor regulatory impact. Therefore, a Regulation Impact Statement is not required.

A Statement of Compatibility with Human Rights is at Attachment B.

ATTACHMENT A

Details of the Income Tax Assessment (Eligible State and Territory COVID-19 Economic Recovery Grant Programs) Amendment Declaration (No. 5) 2022

Section 1 – Name of the instrument

This section provides that the name of the instrument is the Income Tax Assessment (Eligible State and Territory COVID-19 Economic Recovery Grant Programs) Amendment Declaration (No. 5) 2022.

Section 2 – Commencement

The instrument commences on the day after the instrument is registered on the Federal Register of Legislation.

Section 3 – Authority

The instrument is made under the Income Tax Assessment Act 1997 (the Act).

Section 4 – Schedule

This section provides that each instrument that is specified in the Schedules to this instrument will be amended or repealed as set out in the applicable items in the Schedules, and any other item in the Schedules to this instrument has effect according to its terms.

Schedule 1 – Amendments

Item 1 amends the table in section 5 of the Income Tax Assessment (Eligible State and Territory COVID-19 Economic Recovery Grant Programs) Declaration 2020 to declare the COVID-19 Small Business Hardship Scheme as an eligible grant program for the purpose of section 59-97 of the Act.

The COVID-19 Small Business Hardship Scheme provided reimbursement, by way of a grant, for eligible businesses for costs incurred and paid with selected utilities (gas, water and electricity), commercial rates and commercial vehicle registrations up to the value of $10,000 per business.

ATTACHMENT B

Statement of Compatibility with Human Rights

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

Income Tax Assessment (Eligible State and Territory COVID-19 Economic Recovery Grant Programs) Amendment Declaration (No. 5) 2022

This Legislative Instrument is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

Overview of the Legislative Instrument

The purpose of the Income Tax Assessment (Eligible State and Territory COVID-19 Economic Recovery Grant Programs) Amendment Declaration (No. 5) 2022 is to declare a grant program administered by the Australian Capital Territory as an eligible program for the purposes of section 59-97 of the Income Tax Assessment Act 1997, under which a payment received by an entity from an eligible program is non‑assessable non-exempt income.

Human rights implications

This Legislative Instrument does not engage any of the applicable rights or freedoms.

Conclusion

This Legislative Instrument is compatible with human rights as it does not raise any human rights issues.

Overview

The Income Tax Assessment (Eligible State and Territory COVID-19 Economic Recovery Grant Programs) Amendment Declaration (No. 5) 2022 was enacted to address the ongoing economic impacts of the Coronavirus pandemic by declaring additional grant programs administered by States and Territories as eligible programs under the Income Tax Assessment Act 1997. This legislative instrument aims to ensure that payments received by small businesses under these declared programs are treated as non-assessable non-exempt income, thereby exempting them from Commonwealth income tax. The Declaration was issued by authority of the Treasurer and is designed to support businesses significantly disrupted by public health directives due to COVID-19. This measure aligns with the broader policy objective of providing financial relief to affected businesses and facilitating economic recovery. The Declaration was enacted by the Parliament of Australia and is subject to the provisions of the Legislation Act 2003, including the possibility of disallowance and sunsetting provisions.

Scope and Application

The Income Tax Assessment (Eligible State and Territory COVID-19 Economic Recovery Grant Programs) Amendment Declaration (No. 5) 2022 applies to businesses that received payments under the COVID-19 Small Business Hardship Scheme administered by the Australian Capital Territory. This scheme provided reimbursement for costs incurred and paid for selected utilities, commercial rates, and commercial vehicle registrations up to the value of $10,000 per business. The declaration is made under the authority of the Income Tax Assessment Act 1997 and specifies that payments received by eligible businesses under this grant program are treated as non-assessable non-exempt income, exempting them from income tax by the Commonwealth. The declaration is effective from the day after its registration, and it is subject to disallowance and sunsetting provisions under the Legislation Act 2003. There are no conditions specified in the Act that must be met before the declaration can be made, other than the Treasurer being satisfied that the program meets the criteria outlined in the Act. A Statement of Compatibility with Human Rights confirms that the declaration does not engage any of the applicable rights or freedoms under the Human Rights (Parliamentary Scrutiny) Act 2011.

Key Provisions

The main operative sections of the Income Tax Assessment (Eligible State and Territory COVID-19 Economic Recovery Grant Programs) Amendment Declaration (No. 5) 2022 (the Declaration) are outlined in Attachment A. Section 1 specifies the name of the instrument as the Income Tax Assessment (Eligible State and Territory COVID-19 Economic Recovery Grant Programs) Amendment Declaration (No. 5) 2022. Section 2 states that the instrument commences on the day after it is registered on the Federal Register of Legislation. Section 3 establishes the authority under which the instrument is made, which is the Income Tax Assessment Act 1997 (the Act). Section 4 of the Declaration outlines the amendments to be made to the Act through the Schedules. Schedule 1, specifically Item 1, amends the table in section 5 of the Income Tax Assessment (Eligible State and Territory COVID-19 Economic Recovery Grant Programs) Declaration 2020 to declare the COVID-19 Small Business Hardship Scheme as an eligible grant program for the purposes of section 59-97 of the Act. The obligations and requirements imposed by the Act on the parties or entities it governs are primarily related to the declaration of eligible grant programs. According to subsection 59-97(3) of the Act, the Treasurer must declare a grant program an eligible program if certain conditions are satisfied. These conditions include the program being first publicly announced on or after 13 September 2020, responding to the economic impacts of Coronavirus, targeting businesses significantly disrupted by public health directives, and being requested by the relevant State or Territory authority. The Declaration ensures that the COVID-19 Small Business Hardship Scheme meets these criteria and is thus eligible for the non-assessable non-exempt income treatment under section 59-97 of the Act. The Declaration also outlines the consequences for breach of the provisions it sets out. While the Act itself does not specify conditions that must be met before the power to make the Declaration can be exercised, it does require the Treasurer to be satisfied with certain matters before making a declaration. Breach of these requirements could result in the grant program not being recognised as eligible, thus potentially affecting the tax treatment of payments received under the program. Additionally, the Declaration is a legislative instrument subject to the Legislation Act 2003, meaning it is not exempt from sunsetting and disallowance, which could lead to the instrument being reviewed or terminated by Parliament. No specific offences, penalties, or civil/criminal consequences are mentioned in the Declaration for breach of its provisions. However, the failure to meet the conditions for declaring an eligible program could indirectly lead to tax implications for businesses receiving payments under the program, as these payments would no longer be treated as non-assessable non-exempt income. Such implications would depend on the specific tax obligations and liabilities of the businesses concerned, as well as any relevant tax rulings or guidance issued by the Australian Taxation Office.

Legal classification tags

Area of Law
Taxation Law
Instrument
Legislative Instrument
Concepts
Definitions & Interpretation
Offence Provisions
Compliance Obligations

Interactions

Authorises

All Versions

Sourced from the Federal Register of Legislation at 26 August 2026. For the latest information on Australian Government law please go to https://www.legislation.gov.au.