Monthly tax tip:
Australians are unfortunately affected by many natural disasters but grants and recovery support payments are usually available. If a taxpayer has been affected by drought, flood/fire, or other natural disaster then they may receive a payment from a local, state, or federal agency and each payment has a different tax consequence. Australian Government Disaster Recovery Payments (DRP’s) are treated as exempt income, meaning it is not taxable, but it does need to be included in the recipient’s tax return. Examples of non-taxable payments that aren’t included in the recipient’s tax return are assistance payments from a charity or community group as well as gifts from family and friends. It’s important to be aware of the tax implications of any support payments that you may receive so that income can be correctly reported and taxed, and extra tax is avoided. If a taxable support payment is received, then this will affect your total taxable income and the rate of income tax that is paid so adjustments may be required if paying tax instalments. Any payments received throughout the year should be discussed with your accountant for tax planning measures.
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