What to exclude from your business's assessable income
Work out if an amount or payment your business receives is not assessable income.
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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
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
Storms and floods
Recovery grants
Small businesses and primary producers affected by storms and floods may be eligible to receive special disaster recovery grants.
Grants may be administered by your state or territory government or the Australian Government.
You don't need to pay tax on certain categories of grants paid under the Disaster Recovery Funding Arrangements 2018 for the following storms and floods, as they are treated as NANE income.
- Cyclone Seroja (occurred on 11 and 12 April 2021) – Category C disaster recovery grants paid under the Disaster Recovery Funding Arrangements 2018 to small businesses and primary producers who were affected by Cyclone Seroja are NANE income for the 2021–22 financial year and onwards.
If you are a small business or primary producer and have lodged your 2021–22 tax return, and included a Category C recovery grant you received under the Disaster Recovery Funding Arrangements 2018 in your assessable income, you should amend your return. You may get a refund.
- 2021 Storms and floods (occurred between 19 February 2021 and 31 March 2021) – Category D recovery grants are NANE income for the 2020–21 financial year and onwards.
- 2019 North Queensland Floods (occurred between 25 January 2019 and 28 February 2019) – Category C or D recovery grants are NANE income for the 2018 –19 financial year and onwards.
NANE income treatment also applies to Category C or D recovery grants paid to not-for-profit organisations in response to the 2019 North Queensland Floods.
If you need to confirm what type of category grant funding you received, you may need to speak to the authority within your state or territory that administered your grant.
2019 North Queensland flood: Restocking, replanting or farm infrastructure grants
Primary producers impacted by the North Queensland flood (occurred between 25 January 2019 and 28 February 2019) may be eligible to receive grants for replacing or repairing farm infrastructure, restocking or replanting, or a similar purpose. These grants are NANE income for the 2018–19 financial year and onwards.
Bushfires
2019–2020 Bushfires Relief Recovery Payments
Any bushfire relief recovery or benefits are NANE income if they are provided by any level of government, including:
- Australian Government
- state
- territory
- a municipal corporation
- a local governing body.
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.
Work out if an amount or payment your business receives is not assessable income.