Income Tax Assessment (Eligible State and Territory COVID-19 Economic Recovery Grant Programs) Declaration 2020

Eligible program: A grant program declared by this instrument under subsection 59‑97(3) of the Income Tax Assessment Act 1997. Only programs named in the table in section 5 are eligible. The concept is binary: either the program is listed or it is not. There is no discretion for the Commissioner to treat a non‑listed program as eligible because the declaration is the sole source of the exemption. The term “eligible program” is defined by the Act, not by this instrument; the instrument merely supplies the list.

Non‑assessable non‑exempt income (NANE): This is a statutory classification that sits between assessable income and exempt income. Section 59‑97 of the Act (not reproduced here) provides that a grant received under an eligible program is NANE. The consequence is that the grant is not included in the taxpayer’s assessable income, but it is also not exempt income. Exempt income has certain knock‑on effects: it can reduce prior year losses (under the loss recoupment rules) and it can affect the tax‑free threshold for certain taxpayers. NANE income has none of those effects. It is simply ignored for tax purposes, so the taxpayer receives the full grant amount without any federal income tax impost. However, the grant may still be relevant for other tax or transfer purposes (e.g., GST, state taxes, social security means tests) - but those are outside the scope of this instrument.

The declaration power: Subsection 59‑97(3) of the Act confers a power on the Minister to make a legislative instrument declaring a program to be an eligible program. This instrument is the exercise of that power. The power is not delegated to the Commissioner of Taxation. The instrument is made by the Assistant Treasurer (or equivalent) and is subject to tabling and disallowance in Parliament. The power is not time‑limited; the instrument remains in force until repealed or amended.

Program names and their provenance: Each program is identified by its name as used by the relevant State or Territory. The instrument does not incorporate the program guidelines or eligibility criteria. A taxpayer must actually have received a grant under the specifically named program. If a State renames a program (e.g., “2021 COVID‑19 business grant” becomes “2021 COVID‑19 Business Grant Program”), that renamed program would not be an eligible program until this instrument is amended to reflect the new name. The same applies if a State merges programs. The reliance on static program names creates a risk of misalignment between the instrument and the rapidly changing State grant landscape.

Temporal scope: The instrument commenced on 25 December 2020. Amendments commenced on the day after registration. The instrument does not contain transitional provisions or retrospective application clauses. Therefore, a grant paid before the date the program was added to the table would not be NANE unless the State program itself authorised retroactive declaration? The Act does not permit retroactive declarations - the instrument is legislative and is not expressed to apply from an earlier date. This means that grants paid under a program before the program was listed in this instrument are taxable. For example, the NSW 2022 Small Business Support Program was added by the third amendment (registered 4 April 2022, commenced 5 April 2022). Any grants paid under that program before 5 April 2022 would not be NANE unless the program itself was declared earlier under another instrument or the Act allowed otherwise (it does not).

State and Territory coverage: Only New South Wales, Victoria, Queensland, South Australia, and the Australian Capital Territory have declared programs. Western Australia, Tasmania, the Northern Territory, and the external territories have none. This does not mean those jurisdictions did not provide COVID‑19 business grants; it means their grants do not receive NANE treatment. Recipients of such grants must include them in assessable income (though potentially offset by deductions or concessions under other provisions). The absence of coverage may reflect that those States chose not to apply for a declaration or that their programs did not satisfy the conditions in section 59‑97 (e.g., the program must be “for the purpose of providing economic recovery” from COVID‑19). The instrument gives no reasons for the omissions.

The primary group affected is small businesses (and in some cases sole traders and independent contractors) that received grants under the listed programs. The instrument does not define “small business” - that definition is in the underlying Act and is not relevant to the declaration itself. Anyone who receives a grant under a listed program is a beneficiary of the NANE treatment, regardless of entity type (company, trust, partnership, individual). Larger businesses that do not qualify as “small” under the Act may still receive a grant but the NANE treatment applies by reason of the program declaration, not the taxpayer’s size. However, the programs themselves are generally targeted at small and micro‑businesses.

State and Territory government agencies that administer the programs are indirectly affected. They must ensure that the program they administer matches the name listed in the instrument. If they change the program name or merge it with another, they risk causing tax uncertainty for recipients. In practice, State administrators would have coordinated with the Commonwealth before inclusion.

Tax practitioners and accountants must verify whether a client’s grant corresponds exactly to a table item. This requires checking the official grant letter or agreement. Generic descriptions like “we received a COVID grant from the State” are insufficient. For multi‑program States, misidentification is a real risk. For example, Victoria had numerous overlapping programs: Business Costs Assistance Program Rounds Two through Five, Licensed Hospitality Venue Fund 2021, and several top‑up and extension payments. A practitioner must match the exact program name to the table.

The Australian Taxation Office will assess tax returns based on the instrument. If a taxpayer treats a grant as NANE but the program is not listed, the ATO may reassess, impose penalties, and charge interest. Conversely, if a taxpayer inadvertently includes a NANE grant in assessable income, the ATO will accept the return as correct but may later need to amend if the taxpayer seeks correction.

The Parliament (and the Legislative Instruments Committee) exercises oversight. The instrument is disallowable, so any member can move to disallow it if the list is too narrow or too broad. However, no disallowance motions are recorded in the amendment history.

Businesses in uncovered States (WA, Tas, NT) are potentially worse off. Their State grants are taxable, whereas a comparable Victorian business might get tax‑free treatment. This distorts the effective after‑tax value of grants and could influence business location decisions, though only marginally given the non‑recurring nature of the grants.

The full list of State programs affects entities: NSW programs cover business grants, JobSaver, micro‑business grants, small business support, landlord hardship, accommodation support, festival relaunch, performing arts support. Victoria programs cover alpine businesses, business continuity, business costs assistance (multiple rounds), business support funds, landlord hardship, public events support, independent cinema, hospitality venues, live performance, Melbourne City recovery, outdoor dining, hardship fund, sole trader support, sustainable events. Queensland has one program (2021 COVID‑19 Business Support Grants). South Australia has four programs (additional business support, business hardship, business support July 2021, tourism and hospitality support). ACT has three programs (business support grant, small business hardship scheme, HOMEFRONT 3). No programs are listed for the Northern Territory or Western Australia. The instrument therefore affects only those entities that are in or connected to these five jurisdictions.

Rights: The core right conferred by this instrument is the right to treat a grant as non‑assessable non‑exempt income. That right arises automatically once the grant is paid under a listed program. The taxpayer does not need to apply to the ATO for a private ruling or to make an election. The right is unconditional; there is no requirement that the taxpayer spend the grant in a particular way or that the grant be used for COVID‑19 recovery (though the underlying program may have such conditions, those are State‑law requirements, not federal tax conditions). The right extends to the full amount of the grant.

Duties: The instrument imposes no duties itself. However, the interaction with the general tax law creates duties. A taxpayer must include the grant in their tax return - not as assessable income but as NANE income, typically on the “Non‑assessable non‑exempt income” schedule. Failing to report it at all can lead to administrative penalties for failing to include all items in the return (though the amount would not be subject to tax, the omission may affect loss calculations or other items). The taxpayer bears the burden of proof that the grant was received under a listed program. That requires retaining the grant correspondence, the program guidelines, and any acknowledgement from the State. If the State incorrectly labels the grant under a program that is not listed, the taxpayer suffers the tax consequence, not the State.

State administrators: They have a duty to correctly administer their programs but no duty under this instrument. They may have obligations under their own legislation to issue accurate payment notifications.

No right to object to the instrument itself: Since the instrument is a legislative instrument, a taxpayer cannot object to it directly. If a grant program is not listed, the taxpayer’s remedy is to seek a declaration from the Minister or to convince the State to request inclusion. That is a political process, not a legal one.

Interaction with tax advice: Tax practitioners have a duty to exercise reasonable care in determining whether a grant is from a listed program. Overlooking the exact program name could lead to incorrect tax treatment and potential liability for penalties. Given the large number of programs (especially in Victoria), this is a compliance intensive exercise.

Record‑keeping: While the instrument does not mandate specific records, the general tax record‑keeping obligations under the Taxation Administration Act 1953 require keeping documents that explain the nature of income. For NANE grants, the relevant documents are the grant agreement or letter, and evidence that the program is listed in this instrument. Practitioners should maintain a copy of the instrument (or the relevant compilation) for the relevant income year.

This instrument does not contain any penalty provisions. It is purely declaratory. Enforcement of the underlying tax treatment occurs through the general law.

Penalties for incorrect treatment: If a taxpayer treats a grant as NANE but it is not from a listed program, the grant is assessable income. The shortfall amount (the tax on the grant) will be assessed, and the taxpayer may be liable for:

• A base penalty under Division 284 of Schedule 1 to the Taxation Administration Act 1953 for making a false or misleading statement. The base penalty amount varies by behaviour - if the taxpayer took reasonable care, no penalty; if reckless or intentional, up to 75% of the shortfall.
• A failure to lodge penalty if the grant is omitted from the return altogether (though if the grant is NANE, there is no shortfall, but there is a penalty for failing to include it in the return).
• General interest charge (GIC) from the due date of payment until the shortfall is paid.

Penalties for over‑reporting: If a taxpayer incorrectly reports a NANE grant as assessable income, they pay more tax than required. The ATO will generally refund the excess upon amendment, but the taxpayer may lose the time value of money and may need to apply for an amendment. No penalty attaches for over‑reporting, but it is inefficient.

ATO compliance: The ATO can review grants received and cross‑reference with State data. There is a risk of automated data matching between State grant registries and tax returns. If a taxpayer fails to report a NANE grant, the ATO may issue an “income discrepancy” notice. The taxpayer then must explain that the grant is NANE. If the program is listed, no further action. If not, the ATO will adjust.

No criminal penalties: There is no criminal offence in this instrument. Fraudulent claims on State programs (e.g., applying for a grant you are not entitled to) would be dealt with by the State under its own fraud laws.

Commissioner’s powers: The Commissioner has no power to waive the requirement that a program be declared. If a program is not listed, the Commissioner must treat the grant as assessable. There is no exception for “similar” programs. This is a strict letter‑of‑the‑law requirement.

Disallowance: The instrument can be disallowed in part by Parliament, which would remove a program from the list with prospective effect. That is a parliamentary enforcement mechanism, not a tax enforcement one.

Endnotes: The endnotes indicate no application, saving, or transitional provisions in the amending laws. That means no special rules for grants in transition - if a program is added mid‑year, grants paid before commencement are taxable; grants paid after are NANE. This creates an arbitrary discontinuity.

Income Tax Assessment Act 1997 (the Act): The primary interaction is with section 59‑97, which provides the statutory basis for NANE treatment. The instrument is made under subsection (3) of that section. The instrument does not alter any other part of the Act. For example, it does not affect the general deduction provisions; a business that receives a NANE grant may still deduct expenses incurred with the grant. It also does not affect capital gains tax: if the grant is used to acquire an asset, the cost base is unaffected by the grant’s NANE status (the grant is not added to assessable income, but the asset’s cost base is still the full cost paid). The grant itself is not a CGT event.

Taxation Administration Act 1953: This instrument has no specific interaction, but as noted, penalties and procedural rules apply to the tax treatment of the grants.

State and Territory legislation: The instrument does not override State laws. The grant programs are established under State legislation or executive decisions. The instrument merely adopts the program names for federal tax purposes. If a State program is later invalidated by a court, the instrument would still refer to that program. The grant would still be NANE if paid under the program as it existed at the time of payment. Conversely, if a State expands a program beyond its original scope, the instrument may still cover it as long as the program name remains unchanged.

GST: The instrument has no direct interaction with the A New Tax System (Goods and Services Tax) Act 1999. Grant payments are generally not consideration for a supply, so GST is unlikely to apply. But if a grant is tied to a supply, the GST treatment is independent of the income tax NANE treatment.

Social Security: NANE grants are not exempt income for social security purposes of themselves. However, the grants may be treated as income or assets under the social security law, which uses its own definition of income. The instrument does not affect that.

Family Tax Benefit and other transfer payments: Similar to social security, the tax‑free nature does not mean the grant is ignored for means testing.

International tax: If the recipient is a non‑resident, the NANE treatment still applies because it is a domestic tax provision. But a foreign tax credit or exemption under a tax treaty would be determined separately.

OLPP (Ordinary and statutory income): The instrument bypasses the usual characterisation of receipts. Absent the declaration, a business grant would likely be ordinary income (assessable) or possibly capital if it compensated for loss of a capital asset. The declaration overrides that. It is a limited deeming provision that applies only to listed programs.

Interaction with other instruments: There is no other instrument under section 59‑97(3) currently in force. This is the sole declaration. However, the Minister could make a separate declaration covering other programs (e.g., for natural disaster recovery). They would be standalone.

Subordinate legislation interaction: The instrument is subject to the Legislation Act 2003 - it must be registered, tabled, and may be disallowed. It does not incorporate external material by reference (except the Act itself).

No‑grab clause: There is no clause in this instrument that affects the operation of other Commonwealth laws. It is a simple declaratory instrument.

The instrument has been amended five times since its initial registration on 24 December 2020. The amendment history is recorded in endnotes 3 and 4.

Original instrument (F2020L01709): registered 24 December 2020, commenced 25 December 2020. The original table of eligible programs is not reproduced in the endnotes - only the amendments are listed. It is likely that the original instrument contained a smaller set of programs, possibly covering only the earliest Victorian and NSW programs. The endnote shows the original table items are not specified, but subsequent amendments add items.

Amendment No. 1 of 2021 (F2021L01002): registered 20 July 2021, commenced 21 July 2021. This was a major expansion, adding:

• Items 21A (Alpine Resorts Support Program - later amended), 21B (Business Costs Assistance Program Round Two), 22A (Impacted Public Events Support Program), 22B (Independent Cinema Support Program), 23A (Licensed Hospitality Venue Fund 2021), 23B (Live Performance Support Program), 27 (Sustainable Event Business Program), 30 (Queensland 2021 COVID‑19 Business Support Grants), 50 (SA COVID‑19 Additional Business Support Grant), 51 (SA Business Hardship Grant), 52 (SA Business Support Grant July 2021), 53 (SA Tourism and Hospitality Support Grant), 70 (ACT COVID‑19 Business Support Grant). This reflects the second half of 2021, when Delta variant lockdowns prompted new State programs.

Amendment No. 2 of 2021 (F2021L01178): registered 23 August 2021, commenced 24 August 2021. Added:

• Items 10 (NSW 2021 COVID‑19 business grant), 11 (NSW JobSaver), 12 (NSW micro‑business grant), 25A (Victoria Small Business COVID Hardship Fund), 21BA (Business Costs Assistance Program Round Two - July Extension), 23AA (Licensed Hospitality Venue Fund 2021 - July Extension). Also amended item 21A (Alpine Resorts Support Program) - the endnote says “rs F2021L01178” but actually the “am” is recorded; the endnote says “section 5, table item 21A … am F2021L01178”. Likely corrected the description of streams.

Amendment No. 3 of 2022 (F2022L00513): registered 4 April 2022, commenced 5 April 2022. Added:

• Items 12A (NSW 2022 Small Business Support Program), 12B (Commercial Landlord Hardship Grant), 12C (NSW Accommodation Support Grant), 12D (NSW Festival Relaunch Package), 14 (NSW Performing Arts Relaunch Package), 21A (Alpine Resorts Support Program - read with am F2021L01178). Also note that item 13 (NSW Performing Arts COVID Support Package) was added by F2021L01178, and item 14 by this amendment. This amendment reflects the Omicron wave and subsequent recovery programs.

Amendment No. 4 of 2022 (F2022L01107): registered 25 August 2022, commenced 26 August 2022. Added:

• Items 21BB (Business Costs Assistance Program Round Two - Top Up), 21BC (Round Three), 21BD (Round Four), 21BE (Round Four - Construction), 21BF (Round Five), 22AA (Commercial Landlord Hardship Fund 3), 22AB (Impacted Public Events Support Program Round Two), 23AB (Licensed Hospitality Venue Fund 2021 - Top Up), 23BA (Live Performance Support Program (Presenters) Round Two), 23BB (Live Performance Support Program (Suppliers) Round Two), 71 (ACT HOMEFRONT 3). This is a large addition of Victorian top‑up and extension programs, plus a new ACT program.

Amendment No. 5 of 2022 (F2022L01477): registered 18 November 2022, commenced 19 November 2022. Added:

• Item 70A (ACT COVID‑19 Small Business Hardship Scheme). This is the final amendment recorded - there are no subsequent amendments up to the compilation date. No instruments have been repealed.

Legislative history pattern: The amendments cluster in 2021 and 2022, corresponding to State program rollouts. No amendments occurred in 2023 or later, suggesting that State COVID‑19 grant programs have largely ceased. The instrument remains in force with 41 items. It is possible that no further amendments will be made, as the pandemic emergency is over.

No transitional provisions: None of the amending laws contain saving or transitional provisions. This means that if a program was added mid‑year, the NANE treatment applies only to grants paid on or after the commencement date. Grants paid earlier under the same program name are assessable (unless the program was already declared under an earlier version of the instrument). This creates a potential trap for grants that are paid in instalments or retrospectively.

The instrument itself has not been the subject of any reported litigation. The endnotes contain no reference to court decisions. The instrument is a legislative instrument that is rarely directly challenged, as it confers a benefit (tax exemption) rather than imposing a burden. However, several adjacent legal issues could have arisen, though not recorded in this source:

• Challenge to the validity of the declaration: A taxpayer excluded from the list might argue that the Minister failed to take into account relevant considerations or acted unreasonably in not declaring their State’s program. No such challenge appears in reported case law.

• Interpretation of program names: A dispute could arise if a taxpayer received a grant under a program that is substantially similar to a listed program but with a different name. The ATO would likely rely on the strict wording of the instrument. There is no case law on this point.

• Interaction with State law invalidity: If a State’s program was found to be invalid (e.g., beyond its legislative power), the grant might be repayable. That would affect the tax treatment - the grant may be deemed not to have been “received” under the program. No reported cases.

• Taxpayer reliance on administrative guidance: The ATO may have issued public rulings or guidance on the NANE treatment. Those are not part of the instrument. No litigation is recorded.

• Constitutional issues: The instrument is made under a Commonwealth Act. It does not raise constitutional questions because it merely adopts State programs by reference.

• Judicial review: A disgruntled State government could seek judicial review of the Minister’s decision not to declare its program. The Administrative Decisions (Judicial Review) Act 1977 (ADJR) would apply to the making of the instrument as a decision? But legislative instruments are generally not reviewable under ADJR. No case.

• Tax objections: A taxpayer who is assessed on a grant they believed was NANE could object. The object would be against the assessment, not against the instrument. Those objections are private and not reported unless they reach the Administrative Appeals Tribunal or Federal Court. None are recorded.

In summary, the litigation history is a blank slate. The instrument has operated quietly, with no court challenges. This may reflect the fact that it is a narrowly drawn, beneficial provision that reduces tax liabilities rather than creating disputes. The absence of litigation does not mean there were no disputes; they may have been settled at the ATO level without public record.

Exact naming trap: The most significant gotcha is that only grants from programs with the exact name listed in the table qualify. There is no “substantially similar” or “equivalent” clause. For example, Victoria’s “Business Costs Assistance Program Round Two” is listed; but if a grant letter says “Business Costs Assistance Program Round 2” (using digits), it may be the same program, but the instrument uses the word “Round Two” (spelled out). The ATO may accept minor typographical variations, but the instrument is literal. Practitioners should check the official State program name as it appears on the grant agreement. For multi‑round programs, ensure the round number matches the listed item (e.g., “Round Two” not “Round 2” or “Second Round”). The same risk applies to “Licenced” vs. “Licensed” - the instrument uses “Licenced Hospitality Venue Fund 2021” (Australian spelling with ‘c’). The ACT program “HOMEFRONT 3” is all caps. Any variation could jeopardise NANE treatment.

Timing of declaration vs. grant payment: Grants paid before the program was added to the instrument are taxable. For example, the NSW 2021 JobSaver payment was added by the second amendment on 24 August 2021. If a business received a JobSaver payment on 1 August 2021, that payment is not NANE because the program was not declared at the time of receipt. The instrument does not purport to have retrospective effect. Practitioners must ascertain the exact payment date of each grant instalment relative to the commencement date of the amendment that added the program. This is especially tricky for programs that were added in the middle of a grant period.

Multiple grants from same program: Some programs had multiple rounds (e.g., Business Costs Assistance Program Round Two, Round Three, etc.). Each round is a separate table item. A grant that is labelled “Round Two extension” may fall under item 21BA (Business Costs Assistance Program Round Two - July Extension) but if the State calls it “Round Two Top Up” it falls under item 21BB. The distinction matters because not all rounds may be listed concurrently. The fourth amendment added several top‑up items, but any payments before 26 August 2022 under those items would not be covered.

Absence of coverage for WA, Tas, NT: Businesses in those States are not eligible for NANE treatment regardless of the nature of their COVID grant. This is a pure jurisdictional carve‑out. A business that operates in multiple States may have part of its grant from an uncovered State and part from a covered State; only the latter is NANE. This may also affect businesses that relocated during COVID - the grant is tied to the program of the State that paid it.

Grant repayable: If a State demands repayment of a grant (e.g., for non‑compliance with program conditions), the NANE treatment may be reversed. The tax law would treat the original receipt as income in the year of receipt if it was received under a mistaken entitlement. The instrument does not address this situation. The general law principle is that if a grant is required to be repaid, the taxpayer may be entitled to a deduction for the repayment or a loss. This is a potential double‑hit: the grant was tax‑free, but the repayment is not deductible (because it is a capital or personal expense?). The ATO may treat it as a recoupment. Practitioners should seek specific advice.

Program name changes by the State: If a State renames its program after the instrument was last amended, grants paid under the new name are not covered. The instrument is static until amended. For instance, if Victoria renamed “Business Costs Assistance Program Round Five” to “Business Costs Assistance Program Round Five - Final”, that would not be a listed program. The State may be unaware of this tax distinction and may not notify recipients. This creates a compliance risk for taxpayers who rely on the State’s description rather than the instrument.

Interaction with the loss recoupment rules: NANE income does not reduce prior year losses. If a taxpayer had carried‑forward tax losses, a NANE grant does not absorb those losses, whereas a taxable grant would have reduced them. This can be a disadvantage for loss‑making businesses: a NANE grant preserves losses for future use, but a taxable grant would have generated a refund (if there are no taxable profits). This is not widely understood. The NANE treatment may be less attractive than assessable income for a loss‑making entity. The instrument does not allow the taxpayer to elect to treat the grant as assessable - it is mandatory NANE. Therefore, a loss‑making business cannot choose to use its losses against the grant to obtain a refund. That is a gotcha for tax‑planning.

No notice of declaration: There is no requirement for the State to notify recipients that the program is declared. A taxpayer may assume the grant is taxable (and declare it) or assume it is tax‑free (and not report it at all). The ATO will rely on data matching to pick up unreported NANE grants. The safest approach is to report it as NANE on the tax return. If a taxpayer mistakenly reports it as assessable, they overpay tax and must amend; if they omit it entirely, they may get a discrepancy notice.

Step 1: Identify the exact grant program name. Obtain the official grant letter, agreement, or payment reference. Compare the program name to the table in the instrument as in force at the time of receipt. Pay attention to spelling, capitalisation, and round designations. If the name is an exact match, proceed. If there is any discrepancy, do not assume NANE treatment - treat the grant as assessable unless a separate ATO ruling or later amendment covers it.

Step 2: Determine the date of receipt. If the program was added by an amendment, ensure the payment date is on or after the commencement date of that amendment (the day after registration). For payments received before that date, the grant is not NANE. For ongoing programs that existed before the instrument, check the original commencement date (25 December 2020). Grants paid before that date are not covered.

Step 3: Include the grant in the tax return as non‑assessable non‑exempt income. Use the appropriate schedule in the tax return (for companies, trusts, individuals, etc.). Do not omit it entirely - the ATO expects disclosure. For most platforms, there is a field for NANE income. Label it clearly as “COVID‑19 grant - eligible program” and reference this instrument (F2020L01709 as amended). Keep a copy of the instrument compilation for the relevant income year.

Step 4: Retain all supporting documents. Keep the grant letter, any program guidelines, the ATO receipt of the instrument, and the ATO’s published guidance (if any). These will support the NANE treatment in an audit. The grant letter should show the program name exactly.

Step 5: Monitor amendments. If the State program name changes or if new rounds are announced, check whether the instrument has been updated. The instrument is not automatically updated when a State modifies its program. The onus is on the taxpayer to check the Federal Register of Legislation for amendments. Consider subscribing to updates or using a tax information service.

Step 6: For multiple grants: Each grant receipt must be matched separately. A business that received both a NSW JobSaver payment (item 11) and a NSW 2021 business grant (item 10) must apply NANE treatment to each. If one of those was received before the amendment date, treat that one as assessable.

Step 7: Loss‑making entities: Evaluate whether NANE treatment is beneficial. It is mandatory, so no choice. But be aware that the grant will not reduce carry‑forward losses. If the entity has losses, assessable treatment would have allowed loss utilisation. There is no way to opt out. However, if the entity expects to use losses in future, NANE preserves them. That may be beneficial or detrimental depending on the entity’s tax profile.

Step 8: Seek professional advice if there is any doubt about program name matching, payment dates, or the interaction with State repayment provisions. The ATO may issue informal guidance on program names, but that guidance is not binding. The instrument itself is the authoritative source.

Step 9: For State administrators: Consider including a statement in grant letters that the program is declared under this instrument and that the grant is non‑assessable non‑exempt income for federal tax purposes. This reduces confusion but is not required by law.

Step 10: For practitioners serving clients in uncovered States: Advise those clients that their grants are assessable. There is no equivalent exemption. Recommend that they set aside a portion for tax or seek to have their State government request a declaration from the Commonwealth. The political process is the only avenue.