With the end of the financial year just around the corner and our to-do lists getting longer and longer, it is understandable that many individuals may have forgotten about the flood levy. Here is the basics of what you will need to know about the levy which will apply to your tax return for this year.
What is the flood levy?
The government has introduced a temporary flood and cyclone reconstruction levy (flood levy), which applies to taxable income for the 2011-12 financial year only. The flood levy is designed to help affected communities recover from the recent natural disasters by providing additional funding to rebuild essential infrastructure – for example, roads, bridges and schools.
Who will have to pay the flood levy?
Individual taxpayers, whose taxable income is more than $50,000 in the 2011-12 financial year, will have to pay the flood levy. This includes foreign residents who have Australian income.
Low income earners will not pay the flood levy
If you have a taxable income of $50,000 or less in the 2011-12 financial year, you will not be charged the flood levy.
Certain people affected by natural disasters will not pay the flood levy
Some people affected by natural disasters will be exempt from paying the flood levy, regardless of their taxable income.
Who is exempt from the flood levy?
In June 2011, the ATO sent letters to individuals that they could identify as being exempt. If you did not receive one of these letters, you will need to ask yourself the following questions to work out if you might be exempt.
• Is your taxable income $50,000 or less for the 2011-12 financial year?
• Were you eligible for an Australian Government Disaster Recovery Payment for a declared natural disaster that occurred in the period 1 July 2010 to 30 June 2012 and did you receive this payment by 30 June 2012?
• As a direct result of a declared natural disaster in the period 1 July 2010 to 30 June 2012
o were you unable to gain access to your home for at least 24 hours?
o were you stranded in your home for at least 24 hours?
o did your spouse, child, parent, brother, sister or legal guardian, who was an Australian citizen, die?
o were you seriously injured?
o was your home was destroyed or did your home sustain major damage?
• As a result of a declared natural disaster was your home without electricity, or water, or gas, or sewerage services or another essential service for at least 48 hours?
• Were you a principal carer of a dependent child under 16 years old who experienced any of the events listed above?
• At the time of the declared natural disaster, did either of the following apply:
o You were at least 16 years old, or receiving a social security payment from Centrelink and you were an Australian resident for social security purposes, or
o You were a principal carer of a dependent child under 16 years old who experienced any of the events listed above.
• Are you a New Zealand citizen who received an ex-gratia payment from Centrelink for a natural disaster that occurred in the period 1 July 2010 to 30 June 2012?
If you answered yes to any of these questions you potentially may be exempt from paying the flood levy.
How much will you have to pay?
If you are not exempt, these are the flood levy rates for this financial year:
Flood levy on this income
$0 to $50,000
$50,001 to $100,000
Half a cent for each $1 more than $50,000
More than $100,000
$250 plus 1c for each $1 more than $100,000
If you have any questions in regards to the flood levy, or any other taxation queries, contact a professional immediately. Here at The Quinn Group our experienced team of accountants and tax agents can assist you to minimise your tax and answer any questions you may have. For more information submit an online enquiry or call us on 1300 QUINNS (784 667) to book an appointment.