Tax relief for bushfire victims

As bushfires continue to devastate regional communities across Australia, and the country rallies to provide relief to those affected, the Australian Taxation Office (ATO) and the federal government have announced special tax measures for those impacted.

Victims of the ongoing bushfire crisis will be granted an automatic two-month deferral for lodgments and payments, according to the ATO.

Identified impacted postcodes across NSW, Victoria, Queensland and South Australia will be granted an automatic two-month deferral for activity statement lodgments and payments due, meaning that taxpayers or their agents do not need to apply for a deferral.

“If you’ve been impacted by these bushfires, we don’t want you to be concerned about your tax affairs,” the ATO has said in a statement.

“Now is the time for you, your family and community. We’ll help you sort out your tax affairs later.

“For identified impacted postcodes, we’ll automatically grant deferrals for lodgments and payments due. You, or your agent, don’t need to apply for these deferrals.”

The ATO has also advised those impacted by the disaster but are not covered by the listed postcodes to contact the ATO’s emergency support hotline on 1800 806 218 for assistance based on individual circumstances. 

Disaster relief payments will be tax-exempt

Meanwhile, the federal government has announced that disaster relief payments being made to individuals and businesses impacted by the devastating bushfires will be tax-exempt.

Speaking on Wednesday (8 January), Treasurer Josh Frydenberg commented: “This decision will ensure that every dollar that is paid out to affected individuals, businesses and primary producers goes to supporting them during these difficult times and to rebuilding their livelihoods.” 

The exemption will extend to payments such as: Disaster Recovery Allowance payments made to individuals, and payments that would otherwise be taxable under the Disaster Recovery Funding Arrangements, such as grants that may be made to small businesses and primary producers.

This follows on from an announcement by the Prime Minister in December 2019 that payments being made to eligible Rural Fire Service Volunteers will be free from tax.

According to the Treasurer, legislation to give effect to these changes will be required (as was the case to give effect to similar tax exemptions in relation to the North Queensland floods) and will be introduced in the next sitting of Parliament.

The move comes amid growing support and relief packages for bushfire victims.

On Monday (6 January), Prime Minister Scott Morrison announced that the federal government is establishing a new agency to coordinate a national response to rebuild communities and livelihoods after the devastating fire front has passed.

The $2-billion National Bushfire Recovery Agency, led by former Australian Police commissioner Andrew Colvin, has been created to “ensure the families, farmers and business owners hit by these unprecedented bushfires would get the support they needed as they recover”.

It is said to be similar to the North Queensland Livestock Industry Recovery Agency, which was established following the 2019 North Queensland floods, and the Victorian Bushfire Reconstruction and Recovery Authority created after the 2009 Black Saturday bushfires.

Its key tasks will include:

• Building on the working relationships with state, territory and local governments, including their recovery and reconstruction bodies, and to work with stakeholders in bushfire affected communities, and relevant Commonwealth agencies to inform and integrate recovery and rebuild activities;
• Ensuring affected communities have ready access to “meaningful support and all available services”;
• Providing advice and recommendations to government on the economic and social impacts of bushfire on affected communities, in consultation with relevant agencies across all levels of government; and
• Developing and coordinating the delivery of a long-term plan for the recovery, rebuild and resilience of bushfire affected communities.

The four major banks have also made million-dollar donation pledges to support individuals and communities affected by bushfires, including fire services.

[Related: NAB expands bushfire relief contributions to $5m]