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PKF Australia

Accountants and Business Advisers

Bush Fire Assistance – What Is The Government Doing And What Are The Tax Repercussions?

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John Falzarano

Partner

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Bush Fire Assistance – What Is The Government Doing And What Are The Tax Repercussions?

 

The devastating bush fires sweeping across the country have shocked not only Australians but the world. Since the spark of the 2019 fire season, over 10 million hectares have been burned. Lives have been lost, destroyed and torn apart. But what is the government doing and what are the tax repercussions?

Federal Government

The Federal Government have provided relief including:

  • Immediate cash grants of up to $50,000 to small business owners hit by the bush fires;
  • Immediate cash grants of up to $75,000 to farmers hit by the bush fires; and
  • Loans of up to $500,000 to be made available to any business that has suffered asset or revenue losses as a result of the bush fires. The term of the loan will be for up to 10 years with no repayments and no interest charges in the first two years.

It is important to note that bush fire assistance amounts received are proposed to be exempt from income tax.

The Australian Taxation Office (ATO) has extended deadlines for affected businesses to lodge Business Activity Statements and income tax returns. Identified impacted postcodes will be granted deferrals for activity statement lodgments and payments due. You don’t need to apply for these deferrals. If you have been impacted but your postcode isn’t identified, you can phone 1800 806 218.

State Government

State Governments have also implemented measures to support individuals and businesses impacted by the disaster.

Whilst these are similar across the board, specifics vary state-by-state – however, below is a summary of the main measures.

MOTOR VEHICLE (STAMP DUTY)

Purchase of replacement motor vehicle(s) by a person because existing vehicle(s) destroyed in bush fires.

NSW

VIC

SA

If your vehicle was written off in a declared natural disaster, you may be able to apply for a refund of motor vehicle duty you pay on a replacement vehicle.

Relief of up to $2,100 per car on two cars.

Case-by-case relief considered where more than two cars are destroyed.

Relief of stamp duty of up to $1,940 for replacement passenger vehicles and $1,470 for replacement commercial vehicles.

For replacement vehicles valued above $50,000, relief is capped at $1,940 for a passenger vehicle and $1,470 for a commercial vehicle with the balance of the duty payable.

Case-by-case relief considered where more than two vehicles registered to the same owner are destroyed.

LAND TRANSFERS (STAMP DUTY)

Purchase of replacement home because existing home destroyed in bush fires

NSW

VIC

SA

Currently no relief.

Relief of up to $55,000 in land transfer (stamp duty) on a replacement home. For replacement homes valued above $1 million, the duty relief is capped at $55,000 with the balance of the duty payable.

Relief of up to $48,830 in stamp duty on a replacement home. For replacement homes valued above $1 million, the duty relief is capped at $48,830 with the balance of the duty payable.

LAND TAX

Property destroyed or substantially damaged

NSW

VIC

SA

Payment deadlines extended. No interest charged. Potential to pay any debts in instalments.

Relief for 2020 land tax for affected property.

Relief of 2019-20 and 2020-21 land tax liabilities for affected properties. A refund will be available on any land tax paid for 2019-20 for affected properties.


Property affected but not destroyed or substantially damaged

NSW

VIC

SA

Currently no relief.

Relief of 2020-21 land tax liability considered on a case-by-case basis.

Relief of 2020-21 land tax liability considered on a case-by-case basis.


Property used to provide free accommodation to those affected by bush fires

NSW

VIC

SA

Currently no relief.

Land tax relief on this property if it is provided to affected people in certain circumstances.

Currently no relief.

PAYROLL TAX

NSW

SA

Wages paid or payable to an employee for bush fire-fighting activities or emergency operations are exempt from payroll tax.

Wages paid or payable to an employee for bush fire-fighting activities or emergency operations may be exempt from payroll tax for any period they are engaged as a volunteer member of SACFS or an emergency services organisation responding to the bush fire emergencies.

 

Other state-based grants may be available for small business and primary producers so contact your PKF office if you believe you may be eligible.

Private Sector Donations and Deductions

  • Be cautious of scammers – a good place to start is the Australian Charities and Not-for-profits Commission’s (ACNC) charity register – if the organisation you are looking for is on that list, that should provide some reassurance that you are looking at a legitimate fundraising group.
  • Further to this, for donations to be deductible, they must be made to a Deductible Gift Recipient (DGR recognised by the ATO).
  • If the donation is planned to be significant it is advised that you consult with a PKF professional to ensure that you maximise potential tax benefits from your generous donations. Deductions from donations may be spread over five years.

 


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