Bonus Article, Reconstructing tax records after a natural disaster

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

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

Help from your tax professional
If you wish us to help you reconstruct records or make reasonable estimates, the ATO has asked tax 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 your cooperation, where income was regularly deposited
  • considers contributions made to super funds.

When to make a reasonable estimate
If your 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 we can help you complete.

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

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

Help from your tax professional
If you wish to have our help to reconstruct business records or make reasonable estimates, the ATO also asks that tax agents 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 records cannot be reconstructed, the ATO says it will generally accept a reasonable estimate. But again this will require a signed letter declaring the estimate is true and correct. The pro-forma document linked to above can also be used.