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Compensation for natural disasters: The tax considerations


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 the principal in Tax Partner Pty Ltd which provides tax training and tax consultancy services to accounting and legal firms. The tax training includes a suite of professional development courses on various tax topics and the tax consultancy services includes a wide range of tax advisory services such as high level tax planning in addition to preparing tax advices, private ruling requests and objections and dealing with a variety of tax related topics. Up to December 2013 Tom held the position of Senior Lecturer in Taxation Law and Practice subjects in the School of Law and Justice at the University of Southern Queensland. Tom regularly presents tax seminars to accountants, lawyers and business owners. Tom has been widely published on taxation issues. 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 FCPA, FIPA, Chartered Accountant, Tax Agent and a Chartered Tax Adviser. - Current at 21 February 2018
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