Disaster recovery payments
If your business was affected by the recent floods in NSW and Queensland, you may receive a recovery payment from a local, state or federal government agency. The ATO website advises that the income tax treatment of these support payments is as follows:
- Australian Government Disaster Recovery Payment (one off payment of $1,000 per adult and $400 for each child younger than 16) and Australian Government Disaster Recovery Payment – Special Supplement (a total of $2,000 per adult and $800 for each child under 16, paid in 2 instalments) — you don’t pay income tax on these payments.
- Disaster Recovery Allowance (a short-term allowance for up to 13 weeks – the amount varies) — this payment is generally taxable.
- Natural Disaster Relief and Recovery Arrangements — payments under this scheme are generally taxable.
- Ex gratia recovery payments — whether you pay tax on these payments depends on the specific circumstances of the payments and whether the Commonwealth Government has determined to exempt such payments from tax.
Even if a disaster relief payment is not taxable, you may have to include it in your tax return. If you provide emergency assistance to employees, you can claim a tax deduction for the payments. However, you are not required to withhold tax from the payments as the employee does not pay tax on them.
Tip! Give us a call if you are uncertain whether a disaster recovery payment is taxable and whether you need to disclose it in your tax return.
The ATO can help businesses affected by the recent floods, including businesses not directly impacted.
Activity statements and instalment notices
Small businesses in affected local government areas (LGAs) in Queensland and NSW who need to lodge business activity statements and instalment notices with an original due date of 28 February 2022 or 21 March 2022 can lodge relevant returns up until 28 March 2022. They do not need to request a lodgement deferral if they are able to lodge by that date.
This does not apply to significant global entities or large businesses, who will need to contact the ATO to work through any lodgement concerns.
Lists of affected LGAs in Queensland and NSW can be found on the Services Australia website.
Be aware that:
- ATO systems will still reflect the original lodgement due date of these documents until they are lodged. The due date will only update after the lodgement has been received.
- You may see a penalty on your account until the ATO can complete the process of remitting associated penalties.
- The payment due date for these lodgements will not change. However the ATO will take an empathetic approach to your situation. General interest charge (GIC) will still apply if payment is not made by the original payment due date. If you are not able to pay by the due date, you should contact the ATO to discuss payment options and request a remission of GIC.
If you were not able to lodge by 28 March 2022, you can apply for a deferral on a case-by case basis. If you already have a deferral, it will remain in place.
Other ATO assistance
If you are affected by the floods, the ATO will fast track any GST refunds you are owed. In addition, the ATO may:
- give you extra time to pay a debt;
- set up a payment plan tailored to your particular circumstances, including an interest free period;
- help you find your lost tax file number (TFN) after verifying your identity;
- re-issue tax returns, activity statements and notices of assessment;
- help you re-construct lost or damaged tax records; and
- remit penalties or interest charged during the time you have been affected.
You can also vary your PAYG instalments, as well as claim a credit at label 5B on your activity statement for previous instalments paid. The ATO has said that it will not apply penalties or charge interest on variations for the 2021–22 income year if you have taken reasonable care to estimate your end of year income tax liability.
Tip! We can also liaise with the ATO on your behalf if you prefer.