Edited version of private advice

Authorisation Number: 1052379758535

Date of advice: 31 March 2025

Ruling

Subject: Non-assessable non-exempt income

Question 1

Is the grant received from the 'XXXX Tropical Cyclone - exceptional circumstances package' non-assessable non-exempt income under Division 59 of the Income Tax Assessment Act 1997?

Answer 1

No

This ruling applies for the following period:

Income tax year ended 30 June XXXX

The scheme commenced on:

XXXX

Relevant facts and circumstances

Tropical Cyclone hit northern X on XXXX. Associated rainfall and flooding occurred until XXXX.

You suffered extraordinary and devastating impacts to your business as a result of Tropical Cyclone and the business was isolated for a significant period.

You received a Tourism Exceptional Assistance Grant (TEAG)

The TEAG Grant Guidelines dated XXXX set out that financial assistance is provided under the joint Commonwealth and State Disaster Recovery Funding Arrangements (DRFA) and that the purpose of the assistance is to support tourism operators recover from the significant impacts of Tropical Cyclone.

The 'Event specific (exceptional circumstances) assistance' page on the Reconstruction Authority website states that there are four categories of assistance available under the DRFA and that two categories (Category C and Category D) offer exceptional circumstances assistance for severely affected communities following disaster events. The 'XXXX Tropical Cyclone - exceptional circumstances package' is listed as a current exceptional circumstances package on this page.

Relevant legislative provisions

Division 59 of the Income Tax Assessment Act 1997

Reasons for decision

Question 1 - Is the grant received from the 'XXXX Tropical Cyclone - exceptional circumstances package' non-assessable non-exempt income under Division 59 of the Income Tax Assessment Act 1997 (ITAA 1997)?

Summary

Division 59 of the ITAA 1997 sets out specific disaster relief payments and benefits that are non-assessable non-exempt income. However, the Division does not include a provision in respect of grant payments related to Tropical Cyclone.

The grant payment you received has not been made non-assessable non-exempt income by parliament and must be included in your assessable income.

Detailed reasoning

As discussed on the ATO website, ato.gov.au, on the 'Disaster support grants and deductions for business' page (quick search code QC 72808), if your business has been affected by a natural disaster and you receive a government support grant or payment to help you recover, the payments are counted as assessable income unless they are made non-taxable by parliament.

Division 59 of the ITAA 1997 sets out that the following natural disaster support grants, payments or benefits are non-assessable non-exempt income:

•          Cyclone Seroja 11 April 2021 recovery grants - Category C grants under the Disaster Recover Funding Arrangements 2018 (DRFA 2018) for small business or primary producers affected by Cyclone Seroja;

•          2021 storms and floods recovery grants - Category D grants under the DRFA 2018 for small business and primary producers affected by the storms and floods that occurred in Australia between 19 February 2021 and 31 March 2021;

•          2019-2020 Bushfires Relief recovery payments and non-cash benefits - for government bushfire or recovery funding grants for those affected by the Australian bushfires in the 2019-20 financial year;

•          2019 North Queensland (Qld) floods recovery grants - Category C or D grants under the DRFA 2018 for small businesses, primary producers or non-profit organisations affected by the North Qld monsoonal trough flooding between 25 January 2019 and 28 February 2019;

•          2019 Restocking, replanting or farm infrastructure grants - for primary producers impacted by the North Qld floods between 25 January 2019 and 28 February 2019.

Division 59 of the ITAA 1997 does not include a provision in respect of grant payments related to Tropical Cyclone Jasper.

The grant payment you received has not been made non-assessable non-exempt income by parliament and must be included in your assessable income.