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30 Jun 2022

Income Tax – Government payments to businesses (grants and subsidies)

This Issues Paper considers when and how the government grant provisions in the Income Tax Act 2007 may apply to grants and subsidies received by businesses.  Where the government grant provisions apply, a grant or subsidy paid by a local or public authority to a business is excluded income and the expense funded by the grant is non-deductible.

All legislative references are to the Income Tax Act 2007 unless otherwise stated.


This issues paper was released for public consultation. Consultation closed on 30 June 2022.

About issues papers

Inland Revenue’s Tax Counsel Office (Public Advice and Guidance) develops and publishes public statements interpreting the tax laws.

Where significant uncertainty exists, it helps us to hear from interested parties before we prepare a public statement. This generates discussion so we gain a better understanding of the issues, including practical concerns. An issues paper sets out our initial views on how the relevant tax laws may apply. If it results in the issue of a draft public statement, public consultation will occur in the usual manner.

Given that issues papers produced by the Tax Counsel Office represent our initial views only, taxation officers, taxpayers and practitioners must not rely on them. Only finalised public statements represent authoritative statements by Inland Revenue of its stance on the issues covered. 

Any views presented in an issues paper do not change the Commissioner’s current position or practices.

Find out more about issues papers