Covid-related Financial Relief
What tax liabilities come with coronavirus help?
As relief from economic and financial distress caused by the coronavirus pandemic, you may have received subsidies or grants from the national and/or local government. You may be wondering if you must declare this assistance on your income tax return. Here is a summary of tax treatment and revenue recognition timing published by the National Tax Agency of Japan.
Non-Taxable
Payments received from the support fund set up in response to the new coronavirus (article 7 of the temporary special provisions of employment insurance)
Funds received from the allowance set up to support leave taken in response to the new coronavirus (article 7 of the temporary special provisions of the employment insurance law)
Special Fixed Amount Cash Payout (tentative name) of ¥100,000 per household member (article 4, paragraph 1 of the special measures concerning taxation regarding the coronavirus)
Special Cash Payout for Families with Children in Year 2020 (article 4, paragraph 2 of the act regarding coronavirus-related special taxation measures)
Emergency handouts to help support students (Article 9, Paragraph 1, Item 15 of the Income Tax Act
Temporary Special Cash Payout for Low Income, Single-Parent Households (Article 9, Paragraph 1, Item 17 of the Income Tax Act)
Provider Relief Fund related to the coronavirus (Article 9, Paragraph 1, Item 17 of the Income Tax Act)
Discount coupons provided as Support for Users of Company-Sponsored Babysitters (Article 9, Paragraph 1, Item 17 of the Income Tax Act)
Subsidy under the Babysitter Support Project of Tokyo (Article 9, Paragraph 1, Item 17 of the Income Tax Act)
Taxable
Treated as business revenue. Based on:
Payment decisions
- Covid-19 subsidies (for those who are self-employed and sole proprietors)
- Tokyo Metropolis Infection Spread Prevention Support Fund
Payment decision or expense incurment regarding:
- Employment adjustment subsidies
- Elementary school closure support
- Rent support
- Sustaining subsidies for small businesses
- Business continuity subsidies for agriculture, forestry, and fishing enterprises
- Subsidies for medical institutions and pharmacies helping to prevent coronavirus spread
Expenses incurred in connection with:
- Relief provided under the coronavirus-related supplementary aid to offset interest payments
Treated as Occasional Income
Occasional income (revenue–expenses, maximum ¥500,000 special deduction). Based on revenue recognition timing.
Covid-19 subsidies (for employment income earners)
- Payment decision
Go To Travel Campaign
- At end of travel or on use of coupon tickets
Go To Eat Campaign
- On use of meal tickets
Go To Event Campaign
- On use of event tickets
Treated as Miscellaneous Income
Based on revenue recognition timing.
Covid-19 subsidy (for miscellaneous income earners)
- Payment decision
For more information, please contact Grant Thornton Japan at info@jp.gt.com or visit www.grantthornton.jp/en
