# Disaster payment now tax-free



## Jack Malarkey (Jan 11, 2016)

Shift in taxation treatment of disaster payment?

Statement by the Prime Minister on Sunrise in an interview with Natalie Barr on Thursday 29 July 2021:

*Interview with Natalie Barr, Sunrise | Prime Minister of Australia*








www.pm.gov.au

Relevant extract:


Barr: So those payments, the $750, will that be subject to tax?

Prime Minister: No, it won't and I've made that very clear this morning, back through the system, they won't be taxable. JobKeeper, by the way was.

[end of extract]


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## Jack Malarkey (Jan 11, 2016)

_Accountants Daily_

Friday 30 July 2021

Jotham Lian


*COVID-19 disaster payments to be tax-free: Prime Minister Scott Morrison*

Prime Minister Scott Morrison has declared that COVID-19 disaster payments will now be tax-free, a policy change that will have ramifications for accountants and their clients, say tax experts.







www.accountantsdaily.com.au


COVID-19 disaster payments to be tax-free: Prime Minister Scott Morrison

_Prime Minister Scott Morrison has declared that COVID-19 disaster payments will now be tax-free, a policy change that will have ramifications for accountants and their clients, say tax experts._


Mr Morrison told ABC Radio on Thursday morning that the federally funded income support scheme would now provide tax-free payments of $750 a week to workers who lose 20 or more hours of work a week, and $450 a week to those who lose between eight and 20 hours.

The PM then stressed his point on Seven Network’s Sunrise, stating, “I've made that very clear this morning, back through the system, they won't be taxable. JobKeeper, by the way was.”

Mr Morrison’s position comes despite the Treasury, the ATO, and Services Australia all publicly noting that COVID-19 disaster payments are taxable income.

A Treasury official told Accountants Daily that a policy change had indeed been made and that Treasury was in the process of updating its guidance as of Friday morning.

A legislative change is unlikely to be required, given the COVID-19 disaster payment is authorised under regulations issued by the Governor-General rather than through legislation.

The Institute of Public Accountants general manager of technical policy, Tony Greco, said granting the $750 a week payment with a tax-free status would mean workers will take home more than they did under the original JobKeeper program.

Disaster payment recipients can expect to be better off by $90 a week compared to the JobKeeper wage subsidy, based on an annualised $39,000 income of $750 each week.

“The main concern is that these payments have always been stated as assessable so now there's confusion,” said Mr Greco. “It is a significant shift in treatment from what people have been told and what we have come to expect.”

“This is a seismic shift in the tax treatment for recipients and a windfall which will come at a huge cost to the taxpayer.”

Michael Croker, tax leader at Chartered Accountants Australia and New Zealand, said the policy change would come at a bigger cost to taxpayers and opened up questions around the taxable status of payments made since 3 June- the day the COVID-19 disaster payment was announced.

“Tax policy wonks will be concerned about the so-called income and substitution effects,” said Mr Croker.

“Within the hard-hit NSW business community, the new policy will be factored into the question often put to accountants: ‘Is it better to standdown workers, lower business labour costs and send them to Services Australia for the COVID-19 Disaster Payment?’.

“For some low-paid workers, $750 tax free a week could even be a temporary pay rise, an outcome at odds to the take home pay of a comparable employee still on the business’ payroll.”

According to Mr Morrison, more than $490 million in COVID-19 disaster payments have been paid to over 955,000 workers in NSW and Victoria.

The payments, which were increased on Wednesday from $600 to $750 a week for workers who lost more than 20 hours, and raised $450 from $375 for those who lose between eight and 20 hours, are expected to cost the federal government $750 million a week.


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## Jack Malarkey (Jan 11, 2016)

Jack Malarkey said:


> _Accountants Daily_
> 
> Friday 30 July 2021
> 
> ...


I am very puzzled by the following statement attributed to a Treasury official:

‘_A legislative change is unlikely to be required, given the COVID-19 disaster payment is authorised under regulations issued by the Governor-General rather than through legislation.’_

The legal authorisation of the payment itself has nothing to do with the taxation treatment of the payment.

I am confident that a legislative amendment IS required but that can be achieved very expeditiously as Parliament is sitting from next week.


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## Jack Malarkey (Jan 11, 2016)

Yahoo Finance



https://www.google.com.au/amp/s/au.finance.yahoo.com/amphtml/news/lockdown-payments-tax-free-041026788.html





*Aussies WON’T pay tax on $750 COVID-19 payments, PM says*

Jessica Yun

30 July 2021, 2:10 pm


Australians will not need to pay tax on their $450 and $750 lockdown payments come tax time next year, Prime Minister Scott Morrison has announced.

On Thursday morning, Morrison responded to questions on whether the COVID-19 Disaster Payments would be subject to tax.

No, it won't and I've made that very clear this morning, back through the system, they won't be taxable,” Morrison told _Sunrise_.

“JobKeeper, by the way, was. We are treating this as a disaster in these areas where this has befallen people in the same way the payments that we make for bushfires and the payments we made for floods and other natural disasters, we are making these payments under that disaster payment framework.”

However, Morrison’s statement is a significant break away from all the official advice released by Services Australia, the Australian Taxation Office and Treasury to date.

The ATO’s webpage about the COVID-19 Disaster Payment states that they are “assessable income”.

“Individuals need to report this income in their tax return in the income year the amounts are received,” it states.

Similarly, the Treasury's factsheet about the payments declares: “COVID-19 Disaster Payment is taxable income.”

A Treasury official confirmed to _Accountants Daily_that this represented a policy change and was in the process of updating guidance.

_Yahoo Finance_ has reached out to the Prime Minister’s Office, Treasury, and Services Australia for further comment.

While the change means Australians will be able to pocket all of the $750 than they did with JobKeeper, the change has caused confusion for the accounting industry.

“The main concern is that these payments have always been stated as assessable so now there's confusion,” said Institute of Public Accountants’ Tony Greco.

“It is a significant shift in treatment from what people have been told and what we have come to expect.”

“This is a seismic shift in the tax treatment for recipients and a windfall which will come at a huge cost to the taxpayer.”

Australians will see the new payment levels, $450 and $750, reflected from next week, Morrison said.

From next Tuesday, Australians receiving Centrelink payments will be able to claim $200 top-ups.

The Federal Government has already issued $411 million in disaster payments to nearly half a million Sydneysiders, Morrison said.

The Prime Minister also promised payments would continue to flow even if Sydney’s lockdown continued until Christmas.

“Those payments will keep coming. Just like we were providing that support last year,” he told the _Today Show_.

“What it does is it helps people get through. It's not supposed to replace every dollar they were earning before.

“But just like with the supports we gave last year and JobSeeker and JobKeeper and the cash flow support, it keeps the businesses as whole as possible because on the other side, because we've got a million jobs back into Australia after the pandemic recession last year.

“That's what I foresee this time. We keep them together. When the lockdown lifts, the jobs come back.”


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## Jack Malarkey (Jan 11, 2016)

_Accountants Daily_

Wednesday 4 August 2021

Jotham Lian


*COVID-19 payments to individuals, businesses to be tax-free under law change*
COVID-19 support payments received by individuals and businesses are set to be treated as non-assessable non-exempt income following the introduction of new legislation into Parliament.
www.accountantsdaily.com.au


COVID-19 payments to individuals, businesses to be tax-free under law change

_COVID-19 support payments received by individuals and businesses are set to be treated as non-assessable non-exempt income following the introduction of new legislation into Parliament._

On Tuesday, the Treasury Laws Amendment (COVID-19 Economic Response No. 2) Bill 2021 was introduced into Parliament, confirming Prime Minister Scott Morrison’s comments that COVID-19 disaster payments would now be tax-free.

Under the change, COVID-19 disaster payments dating back to its introduction on 3 June will now be non-assessable non-exempt income, meaning recipients will take home more than they did under the $90 billion JobKeeper wage subsidy program, which was taxed.

Workers who lose 20 or more hours of work a week will receive $750 a week, while those who lose between eight and 20 hours will receive $450.

Up until the Prime Minister’s comments last Thursday, official guidance from the Treasury, the Tax Office and Services Australia all stated that COVID-19 disaster payments were taxable income.

It remains unclear how Victorian workers who received the disaster payments in June and have gone on to lodge their 2019–20 tax returns will be treated by the ATO.

The Tax Office updated its guidance on Tuesday to reflect the potential law change, with further guidance to come once legislation passes both houses.

Michael Croker, tax leader at Chartered Accountants Australia and New Zealand, said he was hoping for a smooth administration of the law change.

“Hopefully the ATO will auto-correct 2021 individual tax returns already lodged which treated the COVID-19 disaster payment as assessable,” said Mr Croker.

“NANE treatment will no doubt be welcomed by recipients of COVID disaster payments and state business support, but adds another, unquantifiable ‘tax expenditure’ eroding the federal government’s budget bottom line.”

Around $500 million in disaster payments has been paid to nearly 1 million workers in New South Wales and Victoria.

Tax-free business support payments

The new legislation will also ensure that COVID-19 business support payments will be treated as non-assessable non-exempt income.

Business support payments will also only be tax-free if they are made under a program declared eligible by Treasurer Josh Frydenberg and were received in the 2021–22 financial year.

NSW’s business support grant, micro-business support grant, and its JobSaver program are expected to be eligible following a joint announcement by Mr Morrison and Mr Frydenberg on 13 July.

Crucially, entities must have an aggregated turnover of less than $50 million to be eligible for the concessional tax treatment, putting it at odds with NSW’s JobSaver program which was recently expanded to businesses with an annual turnover of up to $250 million.

“Life doesn’t get easier for accountants, who now face the challenge of identifying expenditure rendered non-deductible to the extent it relates to the production of NANE (although losses are not eroded by NANE),” said Mr Croker.

“CA ANZ expects consultations to occur with the ATO on this issue.”

The new bill will also allow data from the ATO to be shared with the relevant states and territories administering COVID-19 business support programs.

The information will be used to establish eligibility for support payments and will also be used to facilitate compliance activities. Mr Croker expects BAS and Single Touch Payroll information to now be shared readily between the ATO and relevant government agencies.


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## Jack Malarkey (Jan 11, 2016)

There’ve been some interesting developments with the proposed legislation to make the disaster payments tax free.

The Senate unexpectedly amended the legislation at the instigation of independent senator, Rex Patrick.

The amendments required that the names of businesses with a turnover of more than $10 million that received JobKeeper published on the ATO’s website, along with the number of employees they received the subsidy for and the total amount of support received.

Details of whether a business had sought to repay the subsidy, whether in part or in full, to the government would also have been made publicly available, along with how much they have repaid.

The House of Representatives (under the control of the Government) then promptly rejected the Senate amendments.

A bill can become law only if passed by both houses in the same form.

I expect the Senate will soon back down on its amendments to enable the bill to become law.





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Treasury Laws Amendment (COVID-19 Economic Response No. 2) Bill 2021


Helpful information Text of bill First reading: Text of the bill as introduced into the Parliament Third reading: Prepared if the bill is amended by the house in which it was introduced. This version of the bill is then considered by the second house. As passed by




www.aph.gov.au


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## Jack Malarkey (Jan 11, 2016)

Jack Malarkey said:


> There’ve been some interesting developments with the proposed legislation to make the disaster payments tax free.
> 
> The Senate unexpectedly amended the legislation at the instigation of independent senator, Rex Patrick.
> 
> ...


As predicted, the Senate did not insist on its amendments and the Bill has been passed by both Houses in the same form and is awaiting Royal Assent, which is expected very soon.





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Treasury Laws Amendment (COVID-19 Economic Response No. 2) Bill 2021


Helpful information Text of bill First reading: Text of the bill as introduced into the Parliament Third reading: Prepared if the bill is amended by the house in which it was introduced. This version of the bill is then considered by the second house. As passed by




www.aph.gov.au


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## Jack Malarkey (Jan 11, 2016)

_Accountants Daily_

Tuesday 10 August 2021

Jotham Lian










*Parliament passes bill on tax-free COVID-19 support payments*

COVID-19 support payments to individuals and businesses will now be tax-free after a new bill was passed by both houses on Monday.







www.accountantsdaily.com.au


Parliament passes bill on tax-free COVID-19 support payments

COVID-19 support payments to individuals and businesses will now be tax-free after a new bill was passed by both houses on Monday.

The Treasury Laws Amendment (COVID-19 Economic Response No. 2) Bill 2021 finally passed both houses without amendment on Monday after the Senate agreed not to insist on a transparency measure which would have forced businesses to disclose how much they received in JobKeeper wage subsidies.

Under the new law, COVID-19 disaster payments dating back to its introduction on 3 June will now be non-assessable non-exempt income, meaning recipients will take home more than they did under the $90 billion JobKeeper wage subsidy program, which was taxed.

Workers who lose 20 or more hours of work a week will receive $750 a week, while those who lose between eight and 20 hours will receive $450.

COVID-19 disaster payment recipients can now expect to be better off by $90 a week compared with the JobKeeper wage subsidy, based on an annualised $39,000 income of $750 each week.

The newly passed bill will also ensure that COVID-19 business support payments will be treated as non-assessable non-exempt income.

Business support payments will only be tax-free if they are made under a program declared eligible by Treasurer Josh Frydenberg and were received in the 2021–22 financial year.

Entities must also have an aggregated turnover of less than $50 million to be eligible for the concessional tax treatment, putting it at odds with NSW’s JobSaver program which was recently expanded to businesses with an annual turnover of up to $250 million.

Information and data from the ATO will also now be shared with the relevant states and territories administering COVID-19 business support programs.

Finally, the bill will also give Treasurer Josh Frydenberg powers to authorise additional COVID-19 payments to businesses affected by State or Territory lockdowns between 1 July 2021 and 31 December 2022.

Mr Frydenberg was previously granted similar powers in introducing the JobKeeper program and the JobMaker hiring credit scheme.

Michael Croker, tax leader at Chartered Accountants Australia and New Zealand, believes the Treasurer now has ace up his sleeve as states continue to enter snap lockdowns to combat the spread of COVID-19.

“Accountants are curious about the power this Bill gives the Federal Government to stand-up its own business support arrangements in response to State lockdowns,” said Mr Croker.

“Josh Frydenberg now has an ace in his pocket but nobody knows how he’ll play it.

“Hopefully the ATO will now move quickly to engage with the professional associations on the ramifications of treating COVID-19 Disaster Payments and eligible State business support packages as non-assessable non-exempt income.”


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## Jack Malarkey (Jan 11, 2016)

The Bill to make disaster payments tax-free received Royal Assent on Tuesday 10 August 2021, meaning that it’s now law (Act No. 79 of 2021).





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Treasury Laws Amendment (COVID-19 Economic Response No. 2) Bill 2021


Helpful information Text of bill First reading: Text of the bill as introduced into the Parliament Third reading: Prepared if the bill is amended by the house in which it was introduced. This version of the bill is then considered by the second house. As passed by




www.aph.gov.au


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## Jack Malarkey (Jan 11, 2016)

Australian Taxation Office:







Page not found | Australian Taxation Office







www.ato.gov.au





*COVID-19 Disaster Payments*

The Australian Government is providing COVID-19 Disaster Payments to eligible individuals. The payments support individuals who are unable to earn income because state or territory health orders stop them from working in their usual employment.

Due to recent law changes, the COVID-19 Disaster Payment has been reclassified as non-assessable, non-exempt (NANE) income.

This means it:

is a non-taxable payment
does not need to be included in your tax return.
If you’ve recently applied for the COVID-19 Disaster Payment with Services Australia and received the payment on or after 1 July 2021, you won’t need to include the amount as assessable income in your tax return next year.

If you received a COVID-19 Disaster Payment due to the Greater Melbourne lockdowns in the 2020–21 income year and you haven’t yet lodged your 2020–21 tax return, you don't need to include the payment as assessable income when you lodge.

*If you have already lodged*

If you have already lodged your 2020–21 tax return and included the payment as assessable income, you should amend your return because these payments are no longer taxable. You may get a refund.

You can amend your tax return online through myGov or your registered tax agent. You can also lodge an amendment form or send us a letter. Your amended income amount will be provided to Services Australia for family assistance and Child Support purposes.

For more information, visit COVID-19 Disaster Payment – Services AustraliaExternal Link


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## Jack Malarkey (Jan 11, 2016)

Media release by the federal Treasurer:





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Supporting businesses and individuals impacted by COVID-19 | Treasury Ministers







ministers.treasury.gov.au






10 August 2021

*Supporting businesses and individuals impacted by COVID-19*

The passage of the _Treasury Laws Amendment (COVID‑19 Economic Response No. 2) Bill 2021_ will provide additional support to individuals and businesses that continue to be affected by the COVID‑19 pandemic.

The Bill will ensure that COVID‑19 disaster payments received by individuals from the 2020‑21 income year are tax free, providing additional relief for individuals who are doing it tough.

The Bill also gives effect to the Morrison Government’s commitment to assist any state and territory that is unable to administer its own business support payments in the event of a significant lockdown imposed by a state or territory.

The Treasurer will also be able to determine the tax treatment of eligible COVID‑19 business support payments administered by the Commonwealth.

Under the Bill, the ATO will be able to share data with Australian government agencies for the purpose of administering a COVID‑19 business support program that the Treasurer has declared is eligible for data sharing.

Importantly, the Bill will also provide flexibility to enable necessary temporary adjustments for complying with information and documentary requirements under Commonwealth legislation.

These measures build on the Morrison Government’s support for individuals and businesses during the COVID‑19 pandemic.


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## Jack Malarkey (Jan 11, 2016)

_Accountants Daily_

Thursday 12 August 2021

Jotham Lian





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Redirect Notice






www.google.com.au






*Tax return amendments on the cards for some COVID-19 Disaster Payment recipients*

Individuals who received COVID-19 Disaster Payments in June and have gone on to lodge their tax returns will now need to lodge an amendment after new tax-free laws were passed, the ATO has advised.

The ATO’s guidance comes after a new law was passed on Monday to ensure COVID-19 Disaster Payments dating back to its introduction on 3 June will now be treated as non-assessable non-exempt income.

Such payments were previously classified as taxable income by the ATO, the Treasury and Services Australia, until Prime Minister Scott Morrison made the change on the fly in late July.

New legislation was then introduced last week and sailed through the Parliament, making the COVID-19 Disaster Payments more generous than the $90 billion JobKeeper wage subsidy program, which was taxed.

Due to its retrospective application to 3 June — when Victoria entered its fourth lockdown — some individuals will now need to lodge an amendment if they have already lodged their 2020–21 tax return and included the payment as assessable income.

“If your client received this payment from Services Australia due to the Greater Melbourne lockdowns in the 2020–21 income year and you’ve already lodged their tax return, you will need to lodge an amendment,” said the ATO on Wednesday.

“Clients who received the payment on or after 1 July 2021 won’t need to include the amount as assessable income in their tax return next year.”

Accountants Daily understands that Services Australia will now reach out to impacted individuals through a myGov message and SMS.

Michael Croker, tax leader at Chartered Accountants Australia and New Zealand, said it was unfortunate that individuals or their tax agents would need to lodge an amendment.

“It’s a pity the ATO computer can’t talk to the Services Australia computer and auto-amend the assessments for tax returns already lodged by COVID-19 Disaster Payment recipients,” said Mr Croker.

Under the payments, workers who lose 20 or more hours of work a week will receive $750 a week, while those who lose between eight and 20 hours will receive $450.

The original JobKeeper payments were also worth $750 a week but were taxed, meaning previous recipients received $90 less each week based on an annualised $39,000 income of $750 each week.


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