Tax treatment of Benefits, etc.

Regarding benefits, subsidies, cooperative grants, etc. provided by the national and local governments as support to town residents as a result of COVID-19, the taxation differs depending on the eligibility and purpose under the law as follows.

Items that are exempt from taxation

As examples, the following benefits and others are exempt from taxation.

Exempted from taxation according to the law on which the payment is based

  • The support fund  for the leave forced to be taken under the COVID-19 outbreak
    (Temporary Special Provision concerning Employment Insurance Act, Article 7)
  • The support allowance for the leave forced to be taken under the COVID-19 outbreak (Temporary Special Provision concerning Employment Insurance Act, Article 7)

Items exempt from taxation under Act on Special Measures concerning Covid19

  • Special Flat-rate Benefits (Act on Special Measures Concerning Covid-19, Article 4.1)
  • Temporary Special Benefit for Households Raising Children (Act on Special Measures Concerning Covid-19, Article 4.2) 

Items exempt from taxation under the provisions of the Income Tax Act

1. Money and goods provided for school expenses (Article 9.1.15 of the Income Tax Act), emergency benefits for student support

2. Reasonable compensation to be paid for damage caused to mind, body or property (Article 9.1.17 of the Income Tax Act).

  • Temporary Special Benefit for Low-income Single-parent Households
  • Special benefit for low-income child-rearing households to support the livelihood of child-rearing households
  • Consolation money for COVID-19 response workers
  • Discount coupons for special measures in the company-led babysitter user support program

Taxable items

Items classified as business income

This includes compensation for a decrease in the income of a business and payments made to compensate for expenditures that should be included in necessary expenses, such as wages paid. If a business’s income for the year, including compensation payments, minus expenses, results in a deficit, there is no tax burden.  In addition, if the compensation is intended to compensate for necessary expenses such as wages paid, the expenditure itself is considered a necessary expense.
For example, the followings are covered.

  • Sustaining benefits (for business income earners)
  • Temporary and monthly support grants for small and medium-sized corporations and sole proprietors
  • Subsidy for employment adjustment
  • Subsidies for dealing with absence from elementary school, etc. (support subsidy)
  • Rent Support Benefit
  • Subsidy for sustaining small businesses
  • Subsidy for sustaining business operations for agriculture, forestry, and fisheries
  • Subsidies for support projects to prevent the spread of infection at medical institutions, pharmacies, etc.
  • Interest subsidy for COVID-19 Special Interest Subsidy Program

Items classified as temporary income

This category includes benefits that are not related to business and are paid temporarily to persons below a certain income level.  Temporary income is not subject to taxation as long as the total amount of temporary income does not exceed 500,000 yen, since a special deduction of 500,000 yen is applied in calculating the amount of income.
For example, the followings are covered.

  • Benefits under the GoTo Travel Project
  • Benefits under the GoTo Eat Business
  • Benefits under the GoTo Event Business

Items classified as miscellaneous income

Benefits that do not apply to business income or temporary income are eligible.
For example, the following is covered.

Sustaining benefits (for miscellaneous income earners)


Information on the tax treatment of various benefits are available on the National Tax Agency website. For details, please refer to “Q9” under “Tax Treatment Related to COVID-19” in the related link “FAQs on Preventing the Spread of COVID-19 Infections in National Taxes and Immediate Tax Treatment such as Filing Tax Returns and Paying Taxes”. For benefits that are not listed, please contact the national or local government that provides the benefits. 

Related Link   


Taxation Division, Finance Department
Telephone : 0276-63-3111
Counter location: Counter No. 10 and 11 on the 1st floor of the Town Hall