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Small businesses are the heart of our economy and when natural disasters strike, “we all feel it”, says CA ANZ tax leader Michael Croker.
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CA ANZ offers road map for disaster recovery
08 March 2022
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10 minute read
Accountants are in for a big financial clean-up task ahead, CA ANZ said, with 87,000 flood insurance claims already in Queensland and NSW worth $1.3 billion.
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“We all held high hopes that 2022 was going to be different,” Michael Croker said. “But sadly, the start of this year has had a familiar feel – with natural disasters, international unrest and ongoing Covid-19 uncertainty.”
Before anything, accountants will need to look after themselves and loved ones, which includes both physical safety but also personal wellness and mental health.
“This is a stressful time and many business owners will feel the pressure of so many people who rely on them. It is vital to get enough sleep, eat well and take care of yourself during this period,” Mr Croker said.
Another key tip is to ensure correct digital management processes for accountants as one of the losses that a business can experience after a natural disaster is damage to its physical or electronic documents.
Clients with businesses affected by the flood should also make sure to document records and repairs.
“Take photos of damage and lost assets, write down key observations and even note down a timeline of events as you remember it and all of your losses,” he said.
“This will be essential for conversations with insurers, customers, staff and suppliers, and to help you better plan and prepare for the future. And, remember, tax deductions apply to repairs, not improvements.”
Moving ahead, revising business cash flow and tax will be an important consideration.
Following any disaster, Mr Croker said businesses should discuss their financial forecasts with their accountant for the current financial year and subsequent years.
“Business owners should work with their accountant to see if any favourable tax adjustments can be made in their next BAS or tax return,” Mr Croker said.
“If there is cash available, a business could be eligible for a 100 per cent tax write-off for equipment to replace depreciating assets lost or damaged in the flood. Your accountant can also liaise with the ATO should extra time be needed for tax lodgements and payment of tax debts.”
Natural disasters often prompt a review of future insurance needs, said Mr Croker. Before entering into a new insurance policy, clients should get advice on the costs and benefits.
Each new natural disaster can also bring out scammers posing as charitable fundraisers or offering clean-up services for an “upfront” cash payment. As most types of ATO debt collection activity is put on hold for postcodes impacted by natural disasters, accountants need to be wary of contact by those purporting to be ATO officials.
Mr Croker said it will also be important to check NSW and Queensland entitlements and keep an eye out for targeted small-business support, with accountants being able to assist on any eligibility criteria and application processes.
All business owners also need to keep up strong communication with their customers and suppliers during times of crisis. Reviewing any purchase and supply agreements to determine the rights and obligations of both parties will be crucial.
“Finally, don’t be scared to ask for help. Small business owners are incredibly self-sufficient, resourceful and resilient, but this can sometimes mean they can become disconnected,” Mr Croker said.
“Take advantage of opportunities to network with local business groups, chambers of commerce – and talk to fellow small business owners. Shared experience and a little bit of communication can go a long way.”
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