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Do I pay tax on Government Grants?

Short answer,  it depends.

Income tax

Most Grants are indeed taxable unless they are specifically excluded from tax.

Any grant relates to your ongoing business activities is likely to be added to assessable income for income tax purposes. The result can be different where the payment is made so that the business can start a new business or close a business.

The ATO has indicated that JobKeeper payments are taxable and will form part of the business taxable income. However, the Cash Boost is not Taxable, for income tax purposes.


Government grants are generally not subject to GST unless the grant relates to a supply of goods or services. The ATO has advised that the cashflow boost and JobKeeper payments are not subject to GST. This is because these are not paid as consideration for a supply of goods or services.

In essence, if you provide goods or services in return for the Government grant, the amount will be taxable and subject to GST, where your business is GST registered.

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