6 July 2011

The flood levy and the new financial year

The flood levy will start to apply to taxable income derived from 1 July 2011. Individuals who have a taxable income over $50,000 in the 2012 financial year and are not exempt will be required to pay the levy.

Are you exempt?

You are exempt from paying the tax levy if you have received an Australian Government Disaster Recovery Payment, Natural Disaster Relief & Recovery Arrangement or the New Zealander ex gratia payment. To see if you fall in to one of the categories, click here

If you have received one of the above payments and the ATO estimates your taxable income in 2012 to be over $50,000 you should receive a letter from the ATO confirming your exemption status.

If you are exempt and a salary and wage earner and have taxable income over $50,000

You need to complete a Flood Levy Exemption declaration form and give it to your employer in order to reduce the tax payments taken out of your salary (beginning on 1 July 2011). You will receive a prefilled declaration in the exemption letter from the ATO, or if you do not receive the ATO notification, you can download this form from the ATO website.

Even if you have received notification from the ATO, if you do not complete and sign the form and give it to your employer, your regular tax payments will include the tax levy and this will be refunded to you following lodgement of your 2012 income tax return.

Click here for more details and to download the flood levy exemption declaration.

If you are exempt and a PAYG tax instalment payer

If you are likely to earn over $50,000 in the 2011-12 tax year and you have not yet lodged your 2011 income tax return, you can vary your instalment payments down. If you have received the exemption notice from the ATO, the flood levy will be automatically excluded from your instalment rates.

If you have not received the ATO notification and do not vary your instalments, your PAYG rates will include the flood levy, and the overpayment will be refunded on lodgement of your 2012 income tax return.

If you are an employer

From 1 July 2011, you must ensure the flood levy is withheld from payments made to employees who will have a taxable income greater than $50,000 in the year.  You will either need to use the new tax tables from the ATO, or upgrade your payroll software for the new rates.

If employees lodge a flood levy exemption declaration, then you will not be required to withhold this extra amount.

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This Newsletter, of necessity, has dealt with matters of a technical nature in general terms only. Clients should contact us for detailed information on any of the items in the Newsletter. No responsibility for loss occasioned to any person acting or refraining from acting in reliance upon any material in this Newsletter can be accepted by any member or employee of the firm.

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