You might think you won’t catch a break when it comes to taxes.
The devasting effects of natural disasters interfere with your daily life and responsibilities. Earlier this year, the North Queensland natural disaster led to flood-wrecked homes and cattle losses amounting to over $1 billion; according to the Insurance Council of Australia.
Here’s important information you need to know when it comes to facing a natural disaster.
What’s a natural disaster?
First off, the ATO defines a natural disaster such as a cyclone, flood, bushfire, or storm. The ATO determines the affected areas by postcodes who receive assistance from the Disaster Recovery Funding Arrangements (DRFA). Any additional postcodes will be added once damage assessments have been finalised.
Click here to view the affected postcodes for the North Queensland disaster.
Otherwise, contact the ATO directly by phoning them at 1800 806 218 if you or your business is affected by a natural disaster outside of the postcodes.
Need more time?
Above all, the ATO knows that taxes are not your priority following a natural disaster. This means that they give you more time to lodge your return, pay, and respond to fulfill your tax obligations for individuals and employers.
For example, they allow the following:
- Extensions for extra time to lodge taxes/other statements
- More time to pay your tax debt, interest-free
- Adjust your PAYG instalment
- Mail is redirected to you during natural disasters (Phone the ATO at 1800 806 218)
Moreover, tax deadlines can also be pushed to another date for natural disaster victims.
Fortunately, the ATO will automatically make arrangements for affected taxpayers. Certain tax payments and lodgments originally due in February, March, April and May 2019, will be extended to due date 31 May 2019. This includes:
- Income tax
- Activity statements
- FBT lodgments
- Tax debt or overdue lodgment
Even if you’ve already lodged your December 2018 activity statement, you can either vary the instalment or claim a credit by revising your activity statement by 31 May 2019. In addition to this, you can also vary your PAY instalments for future periods without any penalties applied.
What is not an exception?
Regardless, it is mandatory that employers meet their superannuation guarantee obligations for employees. Although, they cannot vary the contribution due date or waive the superannuation guarantee charge on late super guarantee payments.
However, tax debt or overdue lodgment deferrals do not apply to large withholders. Large withholders are classified as those who have previously withheld more than $1 million annually or are part of a corporate group that has.
Are you in a tough financial situation?
Natural disasters may make you feel like you’re stuck. Thankfully, you can have early access to a refund or your super. Your refund can be processed as a priority if you phone 1800 806 218. The ATO will also automatically fast track a refund that is due to you if your business or residential address is in one of the impacted postcodes.
As for your super, you may even meet the conditions of release due to a natural disaster under:
- Compassionate grounds
- Severe financial hardship
- Temporary or permanent incapacity
To read more about the conditions of release, click here.
Are assistance payments taxable?
Any relief payment from your government agencies (local, state, or federal), charity/community groups, family, friends, or your employer, is tax-free. That being said, assistance payments you receive from Centrelink payments are always taxable.
Most importantly, taxpayers may be wondering if they’re required to report the relief payments they receive on their tax return. The answer is, it depends on the type of disaster relief payment. You’re required to report the following government disaster recovery payments even if it’s nontaxable and counted as exempt income as shown below.
- Australian Government Disaster Recovery Payments (DRP)
- Disaster Recovery Allowance (DRA)
- Natural Disaster Relief and Recovery Arrangements (NDRRA)
- Ex-gratia recovery payments
As for employers lending a helping hand to their employees, they can claim emergency assistance as a business expense. (For employees, it’s non-taxable of course)
Is your property destroyed or damaged?
Insurance payouts will be non-taxable for personal use assets such as home or household goods. However, if any assets that assist you in earning income, you will need to keep track of insurance payouts and the cost of rebuilding, repairing or replacing the assets.
It depends if the receipt is for capital or assessable income. For example, restoring a capital asset such as an important part of a building structure would qualify as capital. On the other hand, payments for repairs would qualify as assessable income. It may even be a combination of both capital and assessable.
Were any of the options below affected due to a natural disaster?
Click the link for each option above for further information by the ATO.
Getting back your tax documents
Tax records are the last of your worries during a natural disaster.
The ATO can provide you with copies of your income tax returns, activity statements, and notices of assessment. In the case that you lost your TFN, you can use your date of birth, address, or bank account details to verify your identity. You can also contact your employer for copies of your PAYG payment summaries. For bank records, contact your bank and pay a fee to replace them. You can deduct this fee on your tax return since it is due to a natural disaster.
Worst case scenario, you can’t obtain your records to substantiate your claims. Thankfully, the ATO can accept your claims without original documentation. As for self-managed super funds (SMSF), the ATO will allow you to request extra time to retrieve certain documents, or even use previously reported information.
Did you use diesel or petrol?
If you used any taxable fuel in order to generate electricity for domestic purposes (using a motor or generator), you can claim a fuel tax credit. Here’s what qualifies as a home, house or household below:
- Static home (single house, duplex, townhouse, unit or cabin)
- Relocatable home (demountable home)
- Marine home (houseboat)
- Mobile home (caravan or motorhome)
As for businesses, farmers, and others click here for more information from the ATO.
Luckily, the ATO gives you time to get back on your feet.
With E-Lodge, we have the pre-fill option for you in case you have any trouble getting your tax records. When it comes the time to lodge your 2019 tax return, check back E-Lodge to complete your taxes.
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