Compensation for natural disasters: The tax considerations

Taxation in Australia | 1 Dec 11

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Publication date: 01 Dec 11



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 is a Senior Lecturer in Taxation Law and Practice subjects in the School of Law, Faculty of Business and Law at the University of Southern Queensland. He has a broad range of experience in public practice accounting, predominantly in the area of taxation advice and planning. Tom also acts as a tax consultant to a number of accounting firms. He has published widely on tax issues including Goods and Services Tax, tax administration, Capital Gains Tax, taxation of trusts, derivation of income, tax avoidance provisions, taxation of primary producers and Fringe Benefits Tax.
Current at 19 July 2013
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