Apart from the obvious and tragic devastation that is inflicted upon a person’s property during a natural disaster these types of events such as a flood or a fire can also result in the loss of income for many affected people. This can come about as a result of the damage done to workplaces, vehicles, income-earning tools of trade and other essential equipment such as desktop computers and laptops.
The Australian Tax Office says that if you have been impacted by a natural disaster, such as a bushfire, flood or a storm, there is generally no need for you to worry about your tax affairs straight away. You will most likely be let off the hook.
The ATO encourages victims of natural disasters to deal with their more severe problems first which have resulted as part of the tragic event. The ATO also has a dedicated hotline which can provide information to assist and offer support to Australian’s who have been impacted by the natural disaster. The number is 1800 806 218.
Tax obligations can usually be put aside until you have dealt with the direct effects of the natural disaster, whether you have been affected or are helping other people who have been impacted. The ATO will give you more time to settle the tax debts, or if you can’t lodge your return or activity statement, or are unable to straight away deal with any other correspondence that may be currently on the table.
The ATO clarifies that if a business owner is not able to lodge a superannuation guarantee charge (SGC) statement, it will give you more time to lodge it, however you will still be liable for the SGC and the nominal interest component will continue to accumulate. You may be able to diverge the amount of your next instalment if you are liable to pay under the Pay-As-You-Go instalments system.
If you are expecting to receive a refund from an income tax return or activity statement, it might be possible for the ATO to arrange for your refund to be issued as a priority. In limited circumstances, you might be able to access your superannuation to assist you and your dependants, but special consideration will need to be pursued for this to be granted.
When you are a victim of a natural disaster, you are likely to receive assistance from government authorities, employers, charitable institutions, your family, a trade union or other sources. Most one-off assistance payments are tax free, however regular Centrelink payments will remain taxable.
If your property is destroyed or damaged in a disaster, you might receive an insurance payout if you had appropriate cover. How this is treated for tax purposes will depend on the type of property and whether or not the property is income-producing. Repairs to income-producing properties are generally tax deductible in the year you acquire them. However, this depends on whether the work you do restores it to its original condition or goes beyond remedying the damage to the point where the repairs are an improvement or a complete replacement. Significant capital gains tax concessions may also apply.
If your tax records have been lost or destroyed — whether you are an individual, in business, or responsible for a self-managed superannuation fund — the Australian Tax Office can provide assistance to help reconstruct your tax records and make reasonable estimates where necessary.
After a natural disaster, you might need to use taxable fuel (such as diesel or petrol) for generating electricity for domestic purposes; you may then be eligible to claim fuel tax credits. Businesses that are registered for goods and services tax (GST) are able to claim credits for the fuel tax included in the price of fuel used in eligible business activities to run machinery, equipment, plant, and heavy vehicles. Non-profit organisations that are not registered for GST can claim credits for fuel used in operating emergency vehicles or vessels.
The team at C&D Restructure and Taxation Advisory are here to help. As part of the Vault Group we can offer the full suite of financial products and advice to help you navigate the business landscape. Schedule a meeting here via Calendly or give us a call on 07 36086800.
The team at C&D Restructure and Taxation Advisory are here to help. As part of the Vault Group we can offer the full suite of financial products and advice to help you navigate the business landscape. Schedule a meeting here via Calendly or give us a call on 1300 1 VAULT (1300 182 858)
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