Treasury Laws Amendment (2019-20 Bushfire Tax Assistance) Act 2020

Overview

The Treasury Laws Amendment (2019-20 Bushfire Tax Assistance) Act 2020 was enacted by the Parliament of Australia to provide tax relief in response to the 2019-2020 bushfires. The Act aims to assist individuals and entities affected by these bushfires through specific tax exemptions. The amendments made by the Act apply to the 2019-20 income year and later income years. It provides relief by exempting certain payments from being assessable income, particularly targeting volunteer work compensation and disaster relief payments made by governments and local bodies. The policy objective is to support those who have been directly impacted by the bushfires, ensuring they do not face additional financial burdens due to their involvement in relief efforts or their losses from the disaster. The Act also includes provisions to facilitate charitable donations to specific trusts established to support bushfire relief efforts. By amending the Income Tax Assessment Act 1997, the Act introduces new entries for the Australian Volunteers Support Trust and the Community Rebuilding Trust, ensuring that donations to these entities are tax-deductible under certain conditions. This legislative measure seeks to encourage and support community-led recovery efforts by providing a clear tax benefit for contributions to recognised bushfire relief initiatives.

Scope and Application

The Treasury Laws Amendment (2019-20 Bushfire Tax Assistance) Act 2020 is an Australian Commonwealth Act that seeks to provide tax relief and assistance to individuals and entities affected by the bushfires in the 2019-2020 financial year. This Act applies to individuals and entities affected by the bushfires, including those that received payments or non-cash benefits as a result of the fires. The Act applies to the 2019-20 income year and subsequent income years, and its provisions are intended to provide tax relief to those who have been impacted by the fires. The Act amends the Income Tax Assessment Act 1997 to exclude certain payments from assessable income and exempt income, including payments made to individuals for volunteer work with fire services, disaster relief payments, and non-cash benefits provided to entities to assist in recovering from the effects of the bushfires. Additionally, the Act amends the Income Tax Assessment Act 1997 to include two new entities, the Australian Volunteers Support Trust and the Community Rebuilding Trust, in the list of deductible gift recipients. The Act applies to individuals and entities throughout Australia, and its provisions are intended to provide relief to those who have been impacted by the bushfires in the 2019-2020 financial year. The Act does not apply to payments received in an individual's capacity as an employee or contractor, or to workers' compensation payments.

Key Provisions

The Treasury Laws Amendment (2019-20 Bushfire Tax Assistance) Act 2020 (Act) introduces provisions to provide tax relief related to the 2019-20 bushfires. Section 1 of the Act establishes the short title and Section 2 sets the commencement date, which is the day after the Act receives Royal Assent, being 14 February 2020. The Act amends the Income Tax Assessment Act 1997 (ITAA 1997) through Schedules 1 and 2. Schedule 1 of the Act introduces specific provisions regarding payments made in relation to volunteer work with fire services and disaster relief payments. Section 59-55 of the ITAA 1997 is amended to include a new subsection that specifies that payments made to individuals to compensate for lost income due to volunteer work with a fire service during the 2019-20 income year are not assessable income or exempt income. These payments must be made by a State or Territory and covered by an agreement with the Commonwealth, and made on or after 1 January 2020. This provision excludes payments received in an individual’s capacity as an employee or contractor, or workers’ compensation payments. Section 59-60 of the ITAA 1997 is similarly amended to provide that payments or non-cash benefits made to entities to assist with relief from or recovery from the bushfires are not assessable income or exempt income. These payments or benefits must be made by the Commonwealth, a State or Territory, a municipal corporation, or a local governing body, and relate directly to the bushfires. This provision excludes payments or benefits received in an individual’s capacity as an employee or contractor, workers’ compensation payments, or payments of compensation or damages from court orders or settlements. The obligations imposed by the Act require that any payments made in relation to volunteer work or disaster relief must comply with the specified conditions, including the timing, source, and purpose of the payment or benefit. The Act also requires any relevant agreements between the Commonwealth and States or Territories to be in place for payments related to volunteer work. The Act does not explicitly state any penalties or consequences for non-compliance with its provisions. However, general tax law principles apply, and non-compliance with the tax provisions of the ITAA 1997 may result in the payment being treated as assessable income, subject to the usual penalties and interest for late or incorrect tax returns.