More time to lodge, pay and respond
In the days and weeks following a disaster, the ATO understands that your taxation responsibilities are not the most important things on your mind. Because of this, they can give you extra time to meet your obligations.
Even if you have lost your tax file number (TFN), they will be able to verify your identity using other information, such as your date of birth, address or bank account details
Lodging returns and other statements
If you are unable to lodge your return or activity statement, the ATO can give you more time to lodge.
Sometimes the ATO uses a list of ‘affected postcodes’ to identify people and businesses in disaster-affected areas. The ATO can then offer extensions to those people whose tax obligations would ordinarily have fallen due at or about the time of the disaster.
If you are experiencing financial difficulties because of a disaster, you can ask for more time to pay your tax debt, interest free. This includes amounts owing on your activity statement.
Similarly, if you have been working as a volunteer, assisting people affected by a disaster – particularly if you have travelled interstate – the ATO may be able to give you more time to pay.
If you pay your tax under the pay as you go (PAYG instalments) system, you may choose to vary the instalment if there is a significant change in your income or tax situation.
If you are experiencing financial hardship as a result of a disaster, you may receive a relief payment from:
- local, state or federal government agencies
- a charity or community group
- your employer
Most one-off assistance payments are tax-free, however regular Centrelink payments remain taxable.
Emergency assistance in the form of gifts from family and friends are not taxable.
If you use an assistance payment to purchase items for your business, the normal conditions for deductibility apply. The fact that money from a relief fund is used to purchase an item does not affect the deductibility of that item.
Grants from government and private funding bodies do not attract GST, provided the grant recipient does not provide anything of value in return.
Damaged or destroyed property
If your personal use assets – such as your home or household goods – are damaged or destroyed in a disaster, there will generally be no tax consequences if you receive an insurance payout.
However, if your income-producing assets are damaged or destroyed, you will need to work out the correct tax treatment of insurance payouts you receive and your costs in rebuilding, repairing or replacing the assets.
Substantiating your claims
If you are unable to substantiate claims made in your tax returns or activity statements because your records have been lost or destroyed, the ATO can accept the claim without substantiation; for example, where it is not reasonably possible to obtain the original documents.
Donations to assist disaster victims
In response to a disaster, you may wish to make a donation to a relief fund or establish a fund yourself.
Donating to disaster relief appeals
Gifts of cash to the value of $2 or more to a disaster relief appeal are deductible if the organisation receiving the gift is endorsed as a deductible gift recipient (DGR). A DGR is an organisation that is entitled to receive tax-deductible donations.
If you are unsure whether an appeal to which you wish to donate is a DGR, you can check the status on the Australian Business Register (ABR) at www.abr.business.gov.au or by phoning the ATO on 1300 130 248.
If you donate to a bucket appeal that has been approved by the ATO for a specific disaster, you can claim a tax deduction equal to your total donations up to $10 without the usual need to keep a receipt.
If you or your family has been impacted by the recent storms and flooding, please contact the team at Fortunity for any additional Accounting or Financial advice on 02 4304 8888 or www.fortunity.com.au