In response to some media commentary over the tax treatment of financial assistance to bushfire victims in South Australia, the facts are:
- Government grants to resident individuals are not taxable;
- Grants to businesses are generally assessable, but are expected to be offset
by a range of tax deductions and losses that are available to businesses.
In many cases, it is expected that allowable deductions would offset the tax
on the grants and therefore the net effect would be tax neutral;
For example, a farmer who immediately spent the entire amount of a business grant on feed for his livestock would pay no tax on the grant.
- If a payment comes from a fund comprised of public donations it will be characterised as a gift, and not taxable.
This is the same treatment that applied to the victims of the bushfires in Victoria and the ACT.
The Australian Taxation Office has also undertaken to take a sympathetic approach to bushfire affected taxpayers, including:
- more time to meet income tax and activity statement lodgement obligations;
- additional time to pay debts without extra interest charges;
- expediting refunds to affected taxpayers;
- copies of Tax Office documents being provided where original documents have been destroyed; and
- field visits to reconcile lost records.
As personal circumstances will vary, individuals and businesses seeking further information can contact the following Australian Taxation Office helpline numbers:
Individuals: 13 28 61
Businesses: 13 28 66