Large parts of Australia have been affected by drought this winter. The Bureau of Meteorology has forecasted more warm and dry weather with a warmer than average Spring forecasted.
As a result, the drought has affected many businesses, especially in the agricultural industry. The drought has put extra pressure on people and businesses.
The Australian Taxation Office has offered help and support to businesses that have been affected and can offer assistance with tailored payment plans with interest-free periods, more time to pay tax and waiving penalties or interest that might have occurred during the drought.
The ATO has stressed that it is important to understand the possible tax implications on receiving drought assistance payments.
Amounts for emergency relief, such as food and personal clothing are not classed as income and will not be taxed. Deductions cannot be claimed for the costs of buying these items.
Amounts to help your business are income and subject to tax. However, there will be no tax to pay if these amounts are spent on expenses in relation to your businesses, such as purchasing feed for your livestock.
More information can be found on the ATO website here.