How the ATO can help
The ATO has announced various measures to help businesses and individuals in local government areas impacted by the bushfires. These include:
- automatic deferrals for lodgement of income tax, SMSF, FBT and excise returns and activity statements, and their associated payments, until 28 May 2020 (so there is no need to apply for a deferral);
- automatic priority for any refunds due;
- the remission of interest and penalties applied to tax debts since the commencement of the bushfires;
- the suspension of debt recovery action – for taxpayers with a tax debt or outstanding obligation, the ATO will not institute recovery action until at least 28 May 2020; and
- the temporary suspension of current audit activity.
These measures apply to businesses, individuals and self-managed funds in the local government areas impacted by the bushfires. The ATO website lists the affected postcodes. Note that the deferrals do not apply to large withholders.
Here is the link to the postcodes:
If you have lost documents in a bushfire, or they are damaged, the ATO can reissue income tax returns, business activity statements and notices of assessment, help you re-construct tax records and help you find your tax file number.
If you are impacted by the bushfires but you are not in an affected postcode (as included in the list on the ATO website) or are a large withholder, you can call the ATO’s Emergency Support info line on 1800 806 218 for assistance. The Commissioner of Taxation, Mr Chris Jordan, has said that he expects ATO staff to be “flexible, reasonable and pragmatic” when considering each request for assistance.
Monthly GST credits
If you are making purchases to replace stock and other losses, and you report and pay GST quarterly, you can elect to change to monthly reporting and payment, to get quicker access to net amount refunds. You can only change from the start of a quarter, so a change now will take effect from 1 April 2020.
Once you choose to report and pay GST monthly, you must keep reporting monthly for 12 months before you can elect to elect to revert to quarterly reporting (unless your GST turnover is more than $20 million, in which case you must report and pay monthly).
Changing your GST reporting cycle to monthly doesn’t mean you have to change your PAYG withholding reporting cycle. You can manage this by specifying the roles you are changing.
If you’re registered for fuel tax credits, and change your GST reporting from quarterly to monthly, you will also need to claim your fuel tax credits monthly.
You can change your GST reporting cycle through your tax or BAS agent, in the business portal, or by phoning the ATO on 13 72 26.
If you are a quarterly pay as you go (PAYG) instalments payer, you can vary your PAYG instalments to nil on your activity statement for the December 2019 quarter by lodging a revised activity statement before you lodge your income tax return for the year.
You can also vary your PAYG instalments in future periods. The ATO won’t apply penalties or charge interest to varied instalments for taxpayers within the impacted postcodes in the 2019–20 financial year.
If you have already lodged
If you’ve already lodged any quarterly activity statements for 2019–20, you can claim a credit (at item 5B) on your next activity statement for the instalment amount you paid in the previous quarters, to receive a refund of the amount paid.
- You can also revise your latest lodged activity statement to nil and claim a credit for amounts previously paid.
- If you realise you’ve made a mistake working out your PAYG instalment, you can correct it by lodging a revised activity statement or varying a subsequent.
Exemption for disaster relief payments
The Government has announced that various disaster relief payments received by individuals as a result of the 2019-20 bushfires will be tax exempt. The exemption will apply to the following payments:
- Disaster Recovery Allowance payments
- Payments that would otherwise be taxable under the Disaster Recovery Funding Arrangements, such as grants that may be made to small businesses and primary producers
- Payments made to eligible Rural Fire Service Volunteers for loss of income where they have been called out for extended periods of service.
Super guarantee obligations unchanged
The ATO has reminded employers impacted by the bushfires that they still need to meet ongoing super guarantee obligations for their employees. The ATO does not have the power to vary the contribution due date or waive the superannuation guarantee charge but, if an employer needs help, the ATO can agree to a payment plan.
Read our complete February 2020 Taxwise Business Newsletter here