Guide to dealing with disasters
Guide to dealing with disasters
Overview
If you have been affected by a disaster, such as a flood, bushfire or storm, don't worry about your tax affairs right away. We will give you time to deal with your more immediate problems first and then we can help you to sort out your tax affairs later.
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For information about assistance from other government agencies in Australia, visit the Disaster Assist website.
For information about the flood levy, refer to Flood levy.
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More time to lodge, pay and respond
Your tax obligations can be put to one side until you have dealt with the immediate effects of the disaster. If you:
- are unable to lodge your return or activity statement, we can give you more time to lodge, without incurring penalties
- are unable to lodge your superannuation guarantee charge (SGC) statement, we can give you more time to lodge but you will still be liable for the SGC and the nominal interest component (NIC) will continue to accrue
- owe us money, we can give you extra time to pay your debts, without interest charges
- are a volunteer and you helped those affected by a disaster, we can give you more time to lodge or pay
- are liable to pay your tax by instalments under the pay as you go (instalments) system, you may be able to vary the amount of your next instalment
- have received any other correspondence from us and aren't ready to deal with it, don't worry about it - phone us and we will sort it out
- are a registered agent, we can give you extra time to deal with your clients' affairs, whether you were affected by the disaster, or they were.
Early access to your money
If you are expecting a refund from an income tax return or activity statement, we may be able to arrange for your refund to be issued as a priority.
In limited circumstances, you may be able to access your superannuation to assist you and your dependant.
Assistance payments
You may receive assistance from government authorities, charitable institutions, employers, your family, a trade union or other sources.
Most one-off assistance payments are tax free, but regular Centrelink payments remain taxable.
Damaged or destroyed property
If your property is damaged or destroyed in a disaster, you may receive an insurance payment. How this is treated for tax purposes depends on:
- the type of property
- whether or not the property is income-producing.
Repairs to income-producing properties are generally tax deductible in the year you incur them. However, this depends on whether the work you do restores the original condition or goes beyond remedying the damage to the point where it is an improvement or a complete replacement.
Reconstructing your tax records
If your records have been lost or destroyed - whether you are an individual, in business, a registered agent or responsible for a self-managed super fund - we can help you to reconstruct your tax records and make reasonable estimates where necessary.
Fuel tax credits for individuals, businesses and others
Following a disaster, you may 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) can claim credits for the fuel tax included in the price of fuel used in eligible business activities to run machinery, plant, equipment and heavy vehicles.
Non-profit organisations that are not registered for GST can claim credits for fuel used in operating emergency vehicles or vessels.
Donations to assist disaster victims
Whether as an individual or an organisation, you may wish to collect funds or make donations to help victims of a disaster.
Overview
More time to lodge, pay and respond
Early access to your money
Assistance payments
Damaged or destroyed property
Reconstructing your tax records
Fuel tax credits for individuals, businesses and others
Donations to assist disaster victims
More time to lodge, pay and respond
In the days and weeks following a disaster, we understand that your tax responsibilities are not the most important things on your mind. We can give you extra time to meet your obligations.
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Even if you have lost your tax file number (TFN), we will be able to verify your identity by using other information, such as your date of birth, address or bank account details.
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Lodging returns and other statements
If you are unable to lodge your return or activity statement, we can give you more time to lodge, without penalties.
If you are unable to lodge your superannuation guarantee charge (SGC) statement, we can give you more time to lodge but you will still be liable for the SGC and the nominal interest component (NIC) will continue to accrue. The NIC will only stop accruing once the SGC statement is lodged.
Sometimes we use a list of 'affected postcodes' to help us identify people and businesses in disaster-affected areas so that we can offer extensions to those people whose tax obligations would ordinarily have fallen due at or about the time of the disaster.
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To find out whether this extension applies to you, see Specific disasters.
If the general extension is not long enough for you, or you need further assistance, phone us on 1800 806 218.
If you are a registered agent, phone us on 13 72 86.
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Making payments
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 - we 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.
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For more information, refer to:
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Answering our letters
We generally stop sending correspondence to areas affected by major disasters. But if you are expecting mail from us and don't receive it, phone us on 1800 806 218 and we will ensure that your mail is redirected to you.
If you receive mail from us but you are not ready to deal with it right away, phone us as soon as you can on 1800 806 218 to let us know. We can usually give people extra time so they can deal with other, more immediate things first.
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Once you're ready to focus on your tax affairs, phone us on 1800 806 218 to discuss your circumstances and the best way we can help you.
Registered agents can phone us on 13 72 86.
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Registered agents
If you are unable to lodge statements on time because you or your clients have been affected by a disaster, we will give you extra time to lodge.
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For more information:
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Early access to your money
If you are in financial difficulty as a result of a disaster, you may be able to get early access to a refund or to your super.
Faster processing of refunds
If you are expecting a refund from an income tax return or activity statement, we may be able to arrange for your refund to be issued as a priority.
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Phone us on 1800 806 218 to discuss your circumstances and the best way we can help you.
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Access to super
Your super fund may pay you a benefit from your super if you meet a condition of release. Conditions of release that may apply to a person in a disaster include:
- compassionate grounds
- severe financial hardship
- temporary or permanent incapacity.
In the case of death, the super fund will pay any benefits to the dependants of the deceased, the beneficiaries of the deceased estate, or both.
Assistance payments
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.
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Emergency assistance in the form of gifts from family and friends is not taxable.
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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 the item.
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Grants from government and private funding bodies do not attract GST, provided the grant recipient doesn't provide anything of value in return. For more information, refer to Grants and sponsorship in the Guide to GST.
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For some major disasters, we have published information about the tax implications of relevant assistance payments.
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To find out whether we have published information for a particular event, see Specific disasters.
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Government disaster relief payments
If you have received a relief payment from a local, state or federal government agency, you need to understand what type of payment it is and how it affects your tax.
Common types of government disaster relief payments are:
- Australian Government Disaster Recovery Payments (AGDRP)
- Disaster Income Recovery Subsidy (DIRS) payments and Natural Disaster Relief and Recovery Arrangements (NDRRA)
- ex-gratia relief payments.
Australian Government Disaster Recovery Payments (AGDRP)
If you receive an Australian Government Disaster Recovery Payment (AGDRP), it will be treated as exempt income. You do not pay tax on this amount but you need to include it when you work out your tax loss.
Disaster Income Recovery Subsidy (DIRS) and Natural Disaster Relief and Recovery Arrangements (NDRRA)
DIRS and NDRRA payments are generally taxable.
However, the Australian Government has declared that, for some recent natural disasters, DIRS and NDRRA payments are exempt income. You do not pay tax on exempt income but you include the amount when you work out your tax loss.
Ex-gratia relief payments
The tax treatment of ex-gratia relief payments depends on the specific circumstances of the payments. In some recent cases the Australian Government has decided to exempt such payments from tax.
We can't advise you about the tax treatment of ex-gratia payments until the Government decides on the tax status of that type of payment.
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For information on the taxability of specific payments, refer to:
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Charities and community groups
If you receive assistance from a charitable organisation, the payment you receive is not taxable. These payments have no GST implications.
The organisations make these payments voluntarily to help you with the basic necessities of life. You have no right or entitlement to the payment - the payment is in the nature of a gift to you from the organisation.
Your employer
Salary or wages are taxable because they are part of your ordinary income. They have to be included as income in your tax return and your employer will specify the amount as normal salary or wages in your annual payment summary.
However, emergency assistance from your employer - for example, one-off and other non-periodic emergency relief payments - is not taxable.
An employer is not required to withhold tax from a payment that is not taxable.
An employer who gives emergency assistance to an employee can claim a tax deduction as a business expense.
Damaged or destroyed property
If your property is damaged or destroyed in a disaster, you may receive an insurance payment. How this is treated for tax purposes depends on:
- the type of property (your home, other buildings, cars, personal property or work-related items)
- whether or not the property is income-producing (for example, a rental property or business premises).
Generally, if you are able to claim a deduction for the cost of a repair, then any insurance payment you receive will reduce the amount of the deduction you are able to claim.
In some situations you may need to calculate a:
- capital gain or capital loss
- balancing adjustment for a depreciating asset
- capital works balancing deduction.
If you receive an insurance settlement, you do not generally have to pay GST on it provided you tell the insurer before making the claim what proportion of the premium you can claim GST credits for. You can claim GST credits on the part of the premium that relates to business purposes.
Repairs to income-producing property are generally tax deductible in the year they are incurred. If the work goes beyond restoring the original form or function, the expense may not be deductible as a repair. Different rules apply where property is improved or completely replaced. Where the cost of repairs includes GST, you may be entitled to input tax credits if you are registered for GST and incur the cost in carrying on your enterprise.
Reconstructing your tax records
If your records have been damaged or destroyed, there are a number of ways you can reconstruct them.
Documents we hold
We can re-issue or supply copies of tax documents, such as:
- income tax returns
- activity statements
- notices of assessment.
If you have lost your TFN, you can still access your tax information: phone us on 1800 806 218. We will allow you to use other information to verify your identity, such as your:
- date of birth
- address details
- bank account details.
Documents held by others
Your employer or payer should have copies of your PAYG payment summaries and your bank should be able to provide you with any bank records that have been destroyed.
Your registered agent may also have copies of your records.
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If your bank charges a fee for replacing bank records and providing any other service to help you to reconstruct records or provide information due to a disaster, you can claim a deduction in the income year that those fees are charged.
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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, we can accept the claim without substantiation - for example, where it is not reasonably possible to obtain the original documents.
Assistance visits
If you need assistance to reconstruct your records, we may be able to help you.
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For your personal tax return, a tax officer can assist you to make a reasonable estimate. Phone 1800 806 218 between 8.00am and 6.00pm weekdays.
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If you are in business, you can register for an assistance visit. A tax officer can help you reconstruct your records and make reasonable estimates of your income and deductions.
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You can register for an assistance visit:
We will arrange for one of our officers to contact you to make an appointment.
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Self-managed super funds
If you have a self-managed super fund (SMSF), you are required to keep certain records. If you have lost these records in a disaster we will consider a request for additional time to meet your reporting obligations. Where possible, we will make available information that your SMSF previously reported.
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If you need assistance, phone us on 13 10 20.
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Fuel tax credits for individuals, businesses and others
Fuel tax (excise or customs duty) is included in the price of certain fuels, including diesel, petrol, heating oil, kerosene and fuel oil. You may be entitled to claim a fuel tax credit if you use these fuels in undertaking eligible activities.
You cannot claim for alternative fuels, such as:
- liquefied petroleum gas (LPG)
- compressed natural gas (CNG)
- liquefied natural gas (LNG)
- ethanol
- biodiesel.
Domestic electricity generation
You can claim fuel tax credits for any taxable fuel, such as diesel or petrol, you acquire for use in generating electricity for domestic purposes. The fuel can be used to generate electricity using a motor or generator, for yourself or others.
'Domestic purposes' means for a home, house or household. This includes a:
- static home, such as a single house, duplex, town house, unit or cabin
- relocatable home, such as a demountable home
- marine home, such as a houseboat
- mobile home, such as a caravan or motorhome.
Example
Donna's home was destroyed by fire and she no longer has access to an electricity supply. She and her family are living in a caravan on the land while their home is being rebuilt. Donna uses a generator to supply the caravan with electricity. As the caravan is now considered her home, she can claim fuel tax credits for the fuel used in generating electricity for domestic purposes.
Fuel used in a business
Businesses that are registered for GST can claim credits for the fuel tax included in the price of fuel used in eligible business activities to run machinery, plant, equipment and heavy vehicles.
Example
Peter is a sole trader. During the floods, the basement of his business premises - where he kept a lot of stock - filled with water and, for safety, his electricity supply was disconnected. Peter hired a generator to operate a pump to clear the water from his basement. He can claim fuel tax credits for the fuel used in the generator because it was for business purposes.
Operating emergency vehicles or vessels
If you operate a non-profit organisation that has chosen not to register for GST because its GST turnover is less than $150,000, you can still claim fuel tax credits on a fuel tax credits claim form providing you meet all the following requirements:
- only claim for fuel you use to operate emergency vehicles or vessels
- are a non-profit organisation at the time you acquire, manufacture or import the fuel
- acquire, manufacture or import the fuel for use in a vehicle or vessel that
- provides emergency services
- is clearly identifiable as such.
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 us 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.
Donating property
You can claim a deduction for gifts of property you make to a DGR under certain conditions.
For gifts of property, there are also various valuation rules. However, if you purchased the property during the 12 months before making the gift, the amount you may claim is the lower of the price you paid for the goods or property, or their market value when you made your donation.
Other types of property donations may also be tax deductible.
Attending fundraising events
Many DGR fundraising events encourage contributions that give minor benefits to those who contribute. Where a material benefit is received in return, the contributor is not entitled to claim the contribution as a tax deductible donation.
However, contributions made by individuals to DGRs in relation to eligible fundraising events, such as fetes, balls, gala shows, dinners and charity auctions will be tax deductible if they meet certain conditions.
Setting up a tax-deductible appeal
If your organisation wishes to collect money for disaster relief, it may be more expedient to arrange with an established DGR for you to collect money on their behalf. The DGR will already have the required infrastructure in place to collect gifts that are tax deductible and issue receipts.
If your organisation wants to establish its own tax deductible appeal fund, you will need to consider whether your organisation (or the fund) can be endorsed by the ATO as a DGR.
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For more information about fundraising events and setting up an appeal fund:
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Last Modified: Monday, 6 February 2012
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