The Australian Government has announced that disaster relief payments being made to individuals and businesses impacted by the devastating bushfires will be tax exempt.

The announcement was made by Treasurer Josh Frydenberg on 8 January 2020.

The tax exemption will extend to payments such as:

  • Disaster Recovery Allowance payments made to individuals; and
  • payments that would otherwise be taxable under the Disaster Recovery Funding Arrangements, such as grants that may be made to small businesses and primary producers.

This follows on from an announcement by the Prime Minister on 29 December 2019 that the payments being made to eligible Rural Fire Service Volunteers will be free from tax.

Legislation to give effect to these changes will be required as was the case to give effect to similar tax exemptions in relation to the North Queensland floods. The legislation will be introduced in the next sitting of Parliament.

The Australian Taxation Office (ATO) is also providing support, including the automatic deferral of lodgement and payment obligations for individuals and businesses in communities affected by the bushfires.

Comments are closed.