Edited version of private advice

Authorisation Number: 1052170677380

Date of advice: 22 September 2023

Ruling

Subject: Business and community sport flood recovery grant

Question

Is the Business and Community Sport Flood Recovery Grant considered non-assessable non-exempt (NANE) income pursuant to section 11-55 of the Income Tax Assessment Act 1997 (ITAA 1997)?

Answer

No

This ruling applies for the following period:

Period Ended 30 June 20XX

The scheme commenced on:

1 July 20XX

Relevant facts and circumstances

You carry on a business of providing accommodation and rental services.

You provided details on where your business is located. This area was declared as a local government area effected by the 20XX Month A floods under the Disaster Recovery Funding Arrangement.

You were eligible for the grant and received 3 payments during the ruling period.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 11-15

Income Tax Assessment Act 1997 section 11-55

Income Tax Assessment Act 1997 section 52-40

IncomeTax Assessment Act 1997 section 59-99

Reasons for decision

Business and Community Sport Flood Recovery Grants support small businesses, not-for-profit and community sport and active recreation organisations that have suffered direct loss or damage from the State B floods. The grant is funded by the Australian and State B Governments under the disaster recovery funding arrangements for the State B floods which commenced in Month A 20XX.

Businesses located within the local government areas declared under the Disaster Recovery Funding Arrangement are eligible to apply for up to $50,000 excluding GST in total funding to cover expenses resulting from direct flood damage to property, assets, stock or equipment. You were eligible for this grant and were granted three payments totalling a specified amount.

Payments received as a government support grant or payment to help you recover from effects of natural disaster are counted as assessable income unless they are made non-taxable by parliament.

Under Income Tax Assessment Act 1997 section 11-15 the following disaster payments have been declared as ordinary or statutory income which is exempt:

•                     2018 storms - relief payments

The following disaster payments have been declared NANE income under section 11-55 of the ITAA1997:

•                     2019-20 bushfires - payments for volunteer work with fire services

•                     2019-20 - disaster relief payments and non-cash benefits

•                     2019 floods - recovery grants

•                     2019 floods - on-farm grant program

•                     2021 floods and storms - recovery grants

•                     Cyclone Seroja - recovery grants

Conclusion

Pursuant to section 11-55 of the ITAA 1997, the Business and Community Sport Flood Recovery Grant is not listed as approved by parliament as NANE income. Therefore, the payments received under this grant are considered taxable and are required to be reported in the income year they were received.