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On 21 January 2011, the government announced that it will make clean-up and recovery grants, paid under the Natural Disaster Relief and Recovery Arrangements, to primary producers and small businesses affected by the flooding that has occurred since 29 November 2010, exempt from tax.
Such grants are normally treated as assessable income however the government has decided to make these payments non-assessable, non-exempt income.
The government also confirmed that it will make Disaster Income Recovery Subsidy Payments, paid to those affected by flooding events in Australia that commenced on 29 November 2010, exempt from income tax.
The Disaster Income Recovery Subsidy Payments, which are administered by Centrelink, provide financial assistance to employees, small businesses and farmers who have lost income as a direct result of a natural disaster.
The government announced on 3 February 2011 the subsidy would also be available to individuals who lost income as a result of Cyclone Yasi, which devastated Queensland in February 2011.
On 24 February 2011 the government announced further payments to be included in the tax exemption.
The following payments have been announced as being exempt from income tax:
- Disaster Income Recovery Subsidy Payments for floods that occurred from 29 November 2010 and Cyclone Yasi.
- Clean-up and recovery grants, paid under the Natural Disaster Relief and Recovery Arrangements to primary producers and small businesses for flooding events from 29 November 2010 and Cyclone Yasi.
- Ex-gratia payments from the Commonwealth made to New Zealand non-protected special category visa holders for disasters that occurred in Australia during the 2010-11 financial year.
For more information, see:
This measure is part of the Tax Laws Amendment (2011 Measures No.1) Act 2011 and Explanatory Memorandum which received royal assent on 25 May 2011.
Last Modified: Monday, 11 July 2011