Guidelines on the operation of the Employment Wage Subsidy Scheme (EWSS) were recently updated to provide more information on the tax treatment of the Restart Grant. Chartered Accountants Ireland confirmed with Revenue in February that the tax treatment of the Restart Grant for tax purposes, other than for the EWSS eligibility test, depends on how the grant funds were used by a claimant and more information on this matter is now set out in the EWSS guidelines.

The Guidelines now state: For the purposes of qualifying for the EWSS and on a without prejudice basis, Revenue regards the Restart Grant as capital in nature and therefore not included in the definition of turnover for the purposes of assessing employer eligibility for EWSS. However, this does not reflect the general tax treatment of the Restart Grant. Where the grant is used by a sole trader to defray expenditure which is revenue in nature, such as utility or insurance expenses costs, it will be taken into account when calculating the trader’s taxable trading profits. Where the grant is used to fund the acquisition of plant and machinery for use in the sole trader’s business, expenditure which is capital in nature, the trader will be entitled to claim capital allowances in respect of that expenditure net of the grant received. A similar treatment applies for a company in receipt of the restart grant or restart grant plus.