Cabinet has approved an amendment to Section 28 of the Income Tax Act 2015, expanding the scope of the Natural Disaster Reserve to include declared biosecurity emergencies—specifically the Asian Subterranean Termite (AST) infestation.
Currently, Section 28 allows taxpayers to claim a deduction for deposits into a reserve fund held with a financial institution to cover losses to buildings caused by windstorms, tidal waves, landslides and similar catastrophes.
The deduction is capped at 1.5 per cent of the replacement cost for commercial, industrial or agricultural buildings, while residential buildings qualify for the lesser of 1.5 per cent of the replacement cost or $500.
The amendment will allow affected property owners battling AST damage to draw from reserve funds in a tax-effective manner to support repairs or reconstruction.
The change reflects the growing threat of the invasive termite species and the financial strain it places on households and businesses.
A Bill to formalise the amendment will now be drafted in consultation with the National Disaster Management Office.
