When Natural Disaster Strikes – Info For Business Owners

Bushfires, floods, cyclones – unfortunately, Australia is prone to certain natural disasters. Most of us will go our whole lives without being affected by a natural disaster and it’s unlikely you’ll ever have to deal with one. However, as they say: it’s better to be safe than sorry. So what can you do to prepare your business for the worse case scenario? When disaster strikes, how can you mitigate the financial damage and make recovery as easy as possible? We’ve prepared a handy list of hints and tips.

bushfire - Natural Disaster

Image Credit: ToniFish

BEFORE

1. Make sure you have backup copies of data and documentation stored safely off-site.

2. Ensure your evacuation and emergency procedures are up-to-date and the first aid kit is adequately stocked.

3. Keep gutters clean and clear the property of material that could fuel a fire or become a missile in the event of extreme winds (e.g. sheet iron).

4. If practical, obtain a generator and sufficient fuel so that you can keep your business running after the emergency has passed, in case of extended power outages.

5. Ensure that you have adequate insurance to cover you in the event of a natural disaster, including sufficient flood cover. Check with your insurance company in case they require you to make any specific preparations prior to a disaster.

AFTER

1. Contact your insurer before starting any clean up of your business.You might not be covered for unauthorised repairs and your policy may require an insurance assessor to visit the site before you start cleaning. Always follow the advice of your insurer.

2. Fair Work Australia has information about employer responsibilities and employee entitlements after a natural disaster.

3. Check the Grants & Assistance Finder for information about government grants and assistance you may be entitled to after the event of a natural disaster.

TAX

If damaged or destroyed property is partly or wholly income-producing, then the cost of repair must be considered for tax. Below is a guide to the tax treatment of repair expenses:

Rental property: the cost of repairs to a rental property can be claimed if it doesn’t involve a substantial reconstruction, repair or replacement of an entire structure (eg. a fence)

Business vehicle: the cost of repairs to car used partly or wholly for work purposes is an allowable deduction. Replacement of the vehicle with a new one isn’t considered a repair.

Business premises: the cost of repairs to business premises can be claimed if it doesn’t involve a substantial reconstruction, repair or replacement of a whole structure.

Work related items: the cost of a repair to an asset used partly or wholly for work purposes is an allowable deduction. Replacement of the asset with a new one is not considered a repair.

If your rental property or business premises are completely destroyed by a natural disaster, any costs involved in reconstruction are considered “capital” – therefore, not immediately deductible. However, you will be able to claim a deduction for “capital works” over a 25 or 40 year period for the cost of reconstruction.

For more information on the tax treatment of property damaged in a natural disaster, visit the ATO website.

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