Tax Help For Australian Landlords Affected By A Natural Disaster

by Mary Swire, Tax-News.com, Hong Kong

17 May 2011

The Australian Tax Office (ATO) is writing to more than 200,000 people who own a rental property that may have been affected by recent natural disasters. The mail out coincides with a new fact sheet published on the ATO website to alert people to the expenses they may be able to claim that may reduce their taxable income.

The issues that landlords are asked to consider include claiming expenses for repairs, replacement of capital items such as a kitchen or bathroom, rebuilding costs and capital gains tax (CGT) implications where a property is destroyed, taxation treatment of insurance compensation payments and keeping records.

Those affected are asked to keep proper records in order to make a claim, whether they use a tax agent to prepare their tax return or do it themselves. They are requested to keep records of the rental income they receive and the deductible expenses they pay, for five years from October 31 or, if they lodge later, for five years from the date the tax return is lodged, their ownership of the property and all costs of purchasing or acquiring it and selling or disposal of it.

"The ATO understands that many people who own a rental property in those recently affected areas may be in a difficult position and we want to help and support them as much as possible," said Tax Commissioner Michael D'Ascenzo. He continued:

"This can be a confusing and distressing time for rental property owners and we hope that mailing them directly and publishing useful information on our website will give them a better understanding of their entitlements and obligations. "

"People need important information such as what expenses are considered to be a repair, what are improvements, what happens when they receive an insurance payment, effect on depreciable assets when they are destroyed and much more."

"Many of these people will find themselves not knowing what they can or cannot claim. Our role is to put them on the right track when it comes to their tax affairs during this period and provide any assistance we can."

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