I started a company early this year and in May 2023 was given a grant of $139,000 from a government department to develop a product over the course of 2 years.
Now the allocation of these funds are that majority of it will be used for salary to employ myself within the company (which i have been doing since late May) to allow me to work on the product full time to meet the deadlines.
This grand is split into two parts, the first is a $75,000 and when I satisfactorily meet my first deadline I receive the rest.
My account has recently completed a draft copy of my tax statement for the 2022/2023 financial year and it’s shown an estimated owing of $14,500.
According to the drafted document the excess of what didn’t go towards any expenses in 22/23 has been marked as profit and so as I have received it and it’s in business account the ATO requires tax to be paid on it.
Is this right? This is clearly outlined in my budget I submitted to this organisation that this is a two year project. No where in their application processes did it mention the requirement for this money to have already been used for expenditure or I would be taxed on it.
this is a huge chunk of what would be my salary for the next two years.
I’ve asked my accountant and he’s unsure.
Can somebody please help me to understand this!
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