Compensation for natural disasters: The tax considerations

Published on 01 Dec 11 by "TAXATION IN AUSTRALIA" JOURNAL ARTICLE

The financial impact of natural disasters (including floods and cyclones) on business taxpayers can be immense and, in some cases, sufficient to result in the business ceasing to operate. As a result of recent natural disasters, federal and state governments have made certain grants to affected businesses in the form of cash payments and reimbursements.

This article reviews the potential application of goods and services tax on the receipt of such grants, in addition to the entitlement to input tax credits for related acquisitions. This article also reviews the income tax treatment of certain grants and the availability of tax deductions for expenditure related to
the grant moneys received.

Author profile

Thomas Delany CTA

Tom Delany, CTA, is the principal of Tax Partner Pty Ltd, which provides tax training, and tax consultancy services to accounting and legal firms including a wide range of tax advisory services such as high-level tax planning in addition to preparing tax advices, private ruling requests and objections on a variety of tax related topics. Tom holds a Master of Taxation from the University of New South Wales, a Bachelor of Business (with Distinction) from the University of Southern Queensland, is a FCA, FIPA, Tax Agent, Chartered Tax Adviser and recipient of the 2019 SME Tax Adviser of the Year Award. - Current at 20 March 2023

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