ARTICLE
3 February 2011

Proposed Flood Levy

MA
Moore Australia

Contributor

Moore Australia logo
Moore Australia part of a global network of offices, providing auditing and financial reporting services, advising local, national and international clients in the public and private sectors. Moore Australia generates annual revenues in the region of $80m. Moore Australia is part of the Moore Global network and has 14 offices with over 450 people nationwide. Moore Australia has extensive experience in state and local government, biotechnology, energy mining and renewables, health and aged care, education, manufacturing, not for profit, property and construction, retail and tourism and hospitality and has a strong presence in the following service lines: Asia Desk, Audit & Assurance, Business Advisory, Taxation, Corporate Finance, Governance and Risk Advisory.
On 27 January 2011, the Prime Minister announced that the Government would impose a temporary levy on taxable incomes, to apply for the 2011-12 financial year only (i.e. from 1 July 2011), to assist in funding help fund flood reconstruction work.
Australia Tax

On 27 January 2011, the Prime Minister announced that the Government would impose a temporary levy on taxable incomes, to apply for the 2011-12 financial year only (i.e. from 1 July 2011), to assist in funding help fund flood reconstruction work.

The calculation of the levy will be as follows

Flood Levy Calculation
Taxable income (TI) 2011-12 financial year ($) Flood levy ($)
0 – 50,000 Nil
50,001 – 100,000 [TI – 50,000] x 0.5%
100,000+ 250 + [(TI – 100,000) x 1%]

The details of the proposed levy are:

  • a levy of 0.5% will be applied on that part of an individual's taxable income between $50,001 and $100,000;
  • a levy of 1% will be applied on taxable income above $100,000;
  • no levy will apply on taxable incomes of $50,000 or less;
  • those who receive the Australian Government Disaster Recovery Payment for a flood event in 2010-11 will be exempt from the levy.

Example:

An individual has a taxable income of $90,000. The flood levy will be AUD 200 pa or AUD 3.85 per week

The Government intends that the levy will be paid through tax instalments taken out of regular pay through the PAYG system.

The measure is yet to be passed by Parliament.

Impact on Expatriates

Many employers impose a 'hypothetical tax' when their Australian employees are sent overseas i.e. an amount that equates to the tax that would have been paid had the employee remained at home in Australia.

A key question to be resolved is whether the flood levy should be incorporated into the calculation of the Australian hypothetical tax withholding. Similar levies have been imposed in the past (i.e. East Timor funding and the Gun buyback scheme).

Impact on Temporary Residents:

As draft legislation is yet to be introduced to Parliament, we are uncertain whether the flood levy will be imposed on temporary residents.

This publication is issued by Moore Stephens Australia Pty Limited ACN 062 181 846 (Moore Stephens Australia) exclusively for the general information of clients and staff of Moore Stephens Australia and the clients and staff of all affiliated independent accounting firms (and their related service entities) licensed to operate under the name Moore Stephens within Australia (Australian Member). The material contained in this publication is in the nature of general comment and information only and is not advice. The material should not be relied upon. Moore Stephens Australia, any Australian Member, any related entity of those persons, or any of their officers employees or representatives, will not be liable for any loss or damage arising out of or in connection with the material contained in this publication. Copyright © 2009 Moore Stephens Australia Pty Limited. All rights reserved.

Mondaq uses cookies on this website. By using our website you agree to our use of cookies as set out in our Privacy Policy.

Learn More