If you have been affected by a natural disaster
If you've been affected by a natural disaster, you may receive a relief payment from:
- a local, state or federal government agency
- a charity or community group
- your employer
- family or friends.
One-off assistance payments are generally taxable, however some may be tax free. You may still need to include these payments in your tax return.
Some payments are non-assessable non-exempt (NANE) income, which means you don't include it in your tax return and you do not pay tax on it.
If you use an assistance payment to purchase items for your business, remember you may be able to claim a tax deduction.
For more information on business support grants or payments, see Disaster support grants and deductions for business.
Government disaster recovery payments
If you receive a recovery payment from a local, state or federal government agency, you need to understand what type of payment it is and how it affects your tax.
You may need to report and pay tax on government grants, payments and stimulus that you receive from federal, state or territory, or local governments.
Regular Centrelink payments remain taxable, unless exempted by the government.
If your payment is treated as exempt income, this means you don't pay tax on it.
You may need to include the following payments in your tax return, although you may not pay tax on them.
Australian Government Disaster Recovery Payment
If you receive an Australian Government Disaster Recovery Payment (DRP), it will be treated as exempt income. However, if you have carried forward losses from an earlier income year, you will need to reduce that amount by any exempt income.
If you received the Australian Government Disaster Recovery Payment - Special Supplement, you don't need to include this in your tax return because it is not taxable.
Disaster Recovery Allowance and Natural Disaster Relief and Recovery Arrangements
This short-term allowance from Service Australia supports you if you lose income as a direct result of a natural disaster.
Disaster Recovery Allowance (DRA)External Link, Natural Disaster Relief and Recovery Arrangements (NDRRA)External Link and New Zealand Disaster Recovery AllowanceExternal Link (a payment to support eligible New Zealand citizens residing in Australia who've lost income as a direct result of a natural disaster), payments are taxable and you need to report these in your tax return. Services Australia will either advise you by letter that the payment is taxable or include the taxable payment in your annual payment summary.
However, the government may declare that, for some natural disasters, DRA and NDRRA payments are exempt income. If you have carried forward losses from an earlier income year, you will need to reduce that amount by any exempt income.
Services Australia has more information about help for people affected by a natural disaster eventExternal Link.
Reporting Disaster Recovery Allowance in your tax return
When completing your tax return, enter the Disaster Recovery Allowance you received at either:
- Australian Government allowances and payments if you lodge online using myTax
- Question 5 Australian Government allowances and payments if you lodge by paper
- Question 5A Australian Government allowances and payments if you're a registered tax professional.
If you received the Disaster Recovery Allowance, you may be eligible to receive the beneficiary tax offset. This may reduce the amount of tax you pay.
Reporting Disaster Recovery Allowance Top-up in your tax return
The Disaster Recovery Allowance Top-up, New Zealand Disaster Recovery Allowance and New Zealand Disaster Recovery Allowance Top-up will not show on your payment summary from Services Australia. It also won't be prefilled in your tax return. You need to manually include these payments in your tax return.
When completing your tax return, enter the Disaster Recover Allowance Top-up and New Zealand Disaster Recovery Allowance you received at either:
- Australian Government special payments if you lodge online using myTax
- Question 24 Other income if you lodge by paper
- Question 24V or add the Income Details schedule at field Australian government benefit taxable amount (INCDTLS128), with field Australian government benefit type (INCDTLS126) set to Special if you’re a registered tax professional.
New Zealand Ex-gratia recovery payments
The New Zealand ex-gratia Disaster Recovery Payment (PDF, 243KB)This link will download a file provides a one-off financial assistance to eligible New Zealand citizens residing in Australia who hold a 'non-protected' Special Category (subclass 444) visa who have been adversely affected by a major disaster.
Tax on New Zealand Ex-gratia recovery payment
- The tax treatment of ex-gratia recovery payments, payments made by favour and not because of legal obligation, depends on the specific circumstances of the payments. In some recent cases the government has decided to exempt such payments from tax.
- The government decides on the tax status of each particular type of payment.
- Services Australia will send you a letter confirming the amount of Disaster Recovery Allowance you received.
Bushfire payments
Bushfire relief recovery payments
Any bushfire relief recovery or benefits are NANE income if they are provided by any level of government, including:
- Australian Government
- state
- territory
- a municipal corporation
- a local governing body.
Payments to volunteer firefighters
You are not required to pay tax on government support payments you received as a volunteer firefighter.
You don't need to include these payments in your tax return.
Other assistance
State and territory government assistance grants
State and territory grants may be activated for certain localised events. To find out more information, refer to your state or territory government websites.
Assistance from charities and community groups
If you receive assistance from a charitable organisation, the payment you receive is not taxable. These payments have no GST implications.
These payments are not taxable because:
- the organisations make these payments voluntarily to help you with the basic necessities of life
- you have no right or entitlement to the payment
- the payment is a gift to you from the organisation.
Assistance from your employer
Emergency assistance from your employer − for example, one-off emergency relief payments where nothing is expected in return − is not taxable.
An employer is not required to withhold tax from a payment that is not taxable.
An employer that gives emergency assistance to an employee can claim a tax deduction as a business expense.
Gifts from family or friends
If you receive emergency help in the form of giftsExternal Link from family and friends, you don't need to declare them or pay tax on them.