Do you have a family trust or small business in QLD?
You are most likely one of the thousands of people affected by the floods in February 2022.
As the floods pass and we get closer to the financial year, you might be wondering about how those payments will affect your tax return? Or perhaps what you should do if you can’t lodge your returns? Read below to find out how your family or business might be affected, what you can do and to learn about Second Look Accounting and Taxations free consultation.
Are support payments taxable?
If you are receiving a disaster relief payment from Centrelink or Services Australia, you may want to ask them to deduct tax from this payment if applicable. Centrelink and Services Australia don’t automatically deduct tax from some of their payments. You could ask them to do this if you received a payment that is taxable.
Why would you want to reduce the amount of your payment? Well, asking Centrelink to deduct tax themselves will reduce the amount of tax that you must pay at the end of the 2022 financial year. This means that you would be able to pay your tax in smaller amounts throughout the year, rather than a lump sum at the end of the financial year. This could be beneficial if you:
- Have earnings in addition to your Centrelink or Services Australia payment
- Receive another taxable income
Receiving extra income can mean that you go over the Tax-free threshold. To prevent this you can tick the box that deducts tax from your payment when claiming.
Small businesses and individuals paying tax, affected by the floods
Monthly BAS and Lodgements
There is a range of support available for individual taxpayers and small businesses who were in the affected areas of QLD.
Assistant commissioner, Andrew Watson has informed taxpayers of the changes to the dates of BAS lodgement dates.
“There is no need for taxpayers – to call and request a deferral for business activity statements that are now due,”
ATO Assistant commissioner, Andrew Watson
As a result, those who need to lodge their monthly Business activity statements for March 21st, the ATO has allowed taxpayers to lodge up until March 28th without requesting a deferral. The ATO’s systems will keep the original due date until they are lodged so you may see a penalty on your account, but only until the ATO have completed the process of remitting the associated penalties.
If you have concerns, contact ATO’s Emergency support line at 1800 806 218 or speak to your accountant to see what support is available in your circumstances.
Insurance pay-outs
After you have gone through a disaster event like the South-East Queensland floods, there is a high chance you or your business will claim some insurance. You should check if you need to report and pay tax on any of those insurance pay-outs. Keep in mind that businesses or income-producing assets may be taxed while some damaged or destroyed personal items or assets might not.
The following are examples of potentially taxable assets:
- Your family home: If you are running a home business from that same property
- Your personal property: If the pay-out exceeds assets original cost, if it is used for any income producing purpose or if it is worth more than $10,000
- Rental properties: If used to produce income
- Business operator insurance pay-outs: for damaged or destroyed business premises or if you do not inform insurer of your GST
- Depreciating assets: If you receive an insurance pay-out for damage or destruction of a depreciating asset that you used to produce income
While all of these have the potential to be taxable, check with the ATO’s guidelines on taxable insurance pay-outs for a more detailed look at you circumstances.
How can your accountant help you?
For those who lodge BAS monthly, If you will not be able to lodge by 28th of March 2022, your accountant or tax professional can apply for a deferral on a case-by-case basis. If you already have a deferral, it will remain in place.
We understand that tax is not anyone’s main concern currently, but, with monthly Business Activity Statements due at the end of March and getting closer to the end of financial year, we encourage you to contact your accountant and discuss your circumstances as soon as you can.
Are you struggling to meet your tax obligations or in need of additional support?
Second Look Accounting and Taxation are eager to help you! Even if you just need advice. We offer one free consultation to new clients, Obligation free.
Head over to our website , Email us at or give us a call on (07) 55 305 118
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