This interpretation statement provides guidance on how ss CX 47 and DF 1 of the Income Tax Act 2007 apply to payments of grants and subsidies to businesses. Where these provisions apply, a grant or subsidy paid by a local authority, public authority or public purpose Crown-controlled company to a business is not taxable and the expense funded by the grant is non-deductible.

CA ANZ supports the publication of the statement. In CA ANZ’s view, the statement will provide certainty and will be welcomed by business taxpayers and their advisors.

CA ANZ also recommends another example be included illustrating the payment of a grant for a depreciable asset. The grant should be for an amount less than the full cost of the asset. The example should show the depreciation calculation with the cost base of the asset reduced by the grant amount (s DF 3(b)).