Riya Mala 
File Photo
Cabinet has approved an amendment to Section 28 of the Income Tax Act 2015.
Currently, Section 28 provides a tax deduction for deposits made into a reserve fund account with a financial institution to cover losses to buildings caused by windstorms, tidal waves, landslides, or similar natural disasters.
For commercial, industrial, or agricultural buildings, this deduction is capped at 1.5 per cent of the building’s replacement cost.
For residential buildings, the deduction is limited to either 1.5 per cent of the replacement cost or $500 whichever is lower.
The approved amendment will expand the scope of the Natural Disaster Reserve to include declared biosecurity emergencies, specifically the Asian Subterranean Termite infestation.
This means affected property owners will be able to access their reserve funds in a tax-effective manner to support essential repairs or rebuilding works.
A Bill to implement this amendment will be drafted in consultation with the National Disaster Management Office.
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