Reconstructing tax records after a natural disaster

The ATO says it can help if you have individual clients who have lost their records due to a natural disaster such as a bushfire. It says it can achieve this by providing on-site visits to help your client reconstruct their lost or destroyed tax records and/or assistance to work out reasonable estimates if their records cannot be reconstructed.

The ATO may be able to provide copies of information it already has, such as records of your clients’ tax returns, notices of assessment and payment summaries or income statements. It can also speak with third parties if appropriate.

If you reconstruct records on your client’s behalf
If you wish to help your clients reconstruct their records or make reasonable estimates, the ATO asks practitioners to follow a similar process to its own. To reconstruct records, the ATO:

  • asks for information from employers if required (for example, PAYG payment summaries or income statements)
  • uses information from bank accounts, with client cooperation, where income was regularly deposited
  • considers contributions made to super funds.

When to make a reasonable estimate
If your client’s records cannot be reconstructed, the ATO says it will accept a reasonable estimate. It points out however that each client will be required to provide a signed letter declaring the estimate is true and correct. The ATO has already provided a “reasonable estimate pro-forma” that you can help your client complete.

For businesses
Additionally, for your business clients, the ATO says it can help by providing records of your clients’:

  • activity statements and tax returns, if lodged
  • pay as you go (withholding) annual reports, if lodged by employers.

If you reconstruct records on your business client’s behalf
If you wish to help your business clients reconstruct their records or make reasonable estimates, the ATO also asks that you follow a similar process to its own.

To reconstruct records, the ATO:

  • uses bank and other third party information, including information from suppliers
  • uses activity statements that have already been lodged, along with information from the affected business or individual to reconstruct their tax returns
  • considers all information it has already received to work out a trend-based average. The ATO says its preference is for this to be over three years, and for this average to include:
  • tax statistics
  • other external industry norms and factors in economic events.

When to make a reasonable estimate
If your client’s records cannot be reconstructed, the ATO says it will generally accept a reasonable estimate. But again, each client will be required to provide a signed letter declaring the estimate is true and correct. The pro-forma document linked to above can also be used.

Contact the ATO
If you need information about ways to help your natural disaster affected clients, help is at hand with the ATO’s “Natural disaster assistance for registered agents” helpline on 1800 700 724.

Related reading: Tax relief and assistance for bushfire affected taxpayers

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