While about half of all rejected claims are knocked back because the taxpayer can’t provide evidence of what they bought or how it related to earning their income, the Australian Taxation Office (ATO) has assured taxpayers affected by natural disasters that they will not miss out at tax time if they can’t produce evidence to support their claims.
“In these circumstances, bank records or credit card statements along with other documents that outline the nature of the goods or services provided can also be used to substantiate your claim,” assistant commissioner Karen Foat has said.
While taxpayers are reminded that the best way to keep records is to snap a picture of their receipt, save it in the ATO app’s myDeductions tool, and upload to their return in myTax, Ms Foat said there are other ways when photos aren’t an option.
“If you don’t have photos of your documentation, consider what other documentation you may have to support your claim, like bank statements,” Ms Foat said.
However, if all records have been destroyed, the ATO will take a more lenient approach during tax time 2020.
“If you are unable to substantiate your claims because the records have been destroyed, we may be able to accept the claim if it’s not possible to obtain the original and if it’s not possible to use alternative documents to support your claim,” she said.
“It is important to note this is not our general approach, but it can apply if your documents were destroyed in a natural disaster.”
‘Don’t give away your charity deductions’
The ATO has also advised taxpayers to ensure they’re not giving away their charity deductions.
“Australians are a generous bunch, and following the recent bushfire crisis, it’s clear Australians have given a lot this year,” Ms Foat said.
For a gift or donation to be deductible, it must be given to an organisation that is endorsed as a deductible gift recipient (DGR), the ATO reminded.
It advised that not all charities or crowdfunding campaigns are endorsed DGRs, with taxpayers told to confirm the DGR status of an organisation they have donated to by checking on the ABN lookupExternal Link before claiming a deduction.
Ms Foat said: “If you made one or more donations of $2 or more to bucket collections conducted by a DGR, you can claim a tax deduction of up to $10 for the total of those contributions for the year without a receipt.
“However, it is important to keep receipts to support your claim for all other donations beyond this $10 annual limit — over half of the claims we disallow is because taxpayers haven’t kept a record to support their claim.”
The assistant commissioner also addressed the tax treatment of disaster assistance, reiterating that people are not required to pay tax on any relief recovery payments or benefits provided by the government in relation to the 2019–20 bushfires.
The below payments are also not taxable:
- emergency assistance payments from family and friends
- payments from a charitable organisation
- emergency assistance from an employer (for example, one-off and other non-periodic emergency relief payments)
Information about reconstructing tax records is available at ato.gov.au/Reconstructing your tax records.