In response to the current drought, you may wish to make a donation to a relief fund. It is important you are aware of the tax implications associated with making donations via crowdfunding and receiving crowdfunding payments.
If you donate to drought relief, the best way to do so is through an organisation that is a deductible gift recipient (DGR), and has a focus on rural assistance. Donations of $2.00 or more will be tax deductible where donations are made through these registered charities. Donations to crowdfunding platforms are generally only tax deductible if paid to a DGR.
Payments received from crowdfunding platforms to assist your farming business may be assessable income depending on how the funds are used.
The amounts received are not assessable if they are used for emergency relief, such as food and clothing. The amounts received will be assessable if they are used in the business rather than the intended purposes.
Where the amounts are spent on deductible expenses, such as purchasing feed for livestock, there will be no net taxable outcome, as the income amounts will be offset by the deductions obtained. This means, for most farmers, there will be no tax payable in relation to money donated to them for their farm expenses. Income tax will only be paid if the farmer makes a net business profit.