After devastating floods in Queensland in 2011 Australian Government has introduced a flood levy (also known as the Temporary Flood and Cyclone Reconstruction Levy) to help fund the rebuilding of essential infrastructure damaged by natural disasters such as roads, bridges, and schools. The flood levy applies to taxable income for the 2011-12 financial year only and is paid by most taxpayers.
Who have to pay the flood levy tax?
Flood levy tax is applied to individual taxpayers only. This includes foreign residents who have Australian income. Businesses are not required to pay the levy.
The levy is based on an individual’s ability to pay. Below are the flood levy rates:
- Anyone earning under $50,000 will not pay the levy.
- People earning between $50,000 and $100,000 will pay 0.5 per cent of taxable income in excess of $50,000.
- People earning over $100,000 will pay 0.5 per cent of taxable income in excess of $50,000 and 1 per cent of taxable income in excess of $100,000.
For example, for someone who has an income of $60,000 this means the cost of the levy to them will be $0.96 per week. Here is the breakdown of payable levy:
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To calculate levy for your specific salary not included here you can use Flood Levy Calculator.
Flood Levy Exemption
In June 2011, Australian Tax Office sent letters to individuals that ATO could identify as being exempt. If you did not receive one of these letters, you still may be eligible for flood levy exemption:
- 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.
- Where the person has received an Australian Government Disaster Recovery Payment in relation to a flood event in 2010-11 they will be exempt from the levy.
- New Zealand citizens holding a special category visa - If you are 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, you are exempt from the levy.
Employees who are exempt from the levy should ask their employer to not have the levy withheld from their regular pay with other tax withheld. You should complete ATO Flood levy exemption declaration (NAT 73797) form and give it to your employer.
Alternatively, at the end of the year the ATO will assess taxpayers’ tax liability taking into account the exemption from the levy. When you lodge your 2012 income tax return, you need to confirm that you are exempt from paying the flood levy by completing the flood levy question and ATO will not include the flood levy when they work out your tax payable and refund you any flood levy overpayment you may have made during the year.
Payment of the flood levy
Taxpayers will not have to do anything extra to pay the levy. People will make their levy payments through the tax taken out of their regular pay in the same way that people pay the Medicare levy. This will help prevent taxpayers from receiving a tax bill at the end of the financial year. Starting from July 2011 to 30 June 2012, if you earn more than $50,000, your employer will take an additional amount out from each pay to include the flood levy.
Pay As You Go (PAYG) Instalment taxpayers (self-employed people, investors or self-funded retirees) will have the levy charged in their PAYG instalments. People who received an Australian Government Disaster Recovery Payment can seek a variation to their instalment payment so that they don’t have to pay the levy. The ATO is also investigating the possibility of automating PAYG Instalment amounts so that people who don’t have to pay the levy are not charged an amount in their PAYG instalments.
How much revenue will the flood levy raise?
The Treasury has estimated that the levy will raise $1.8 billion. Donations do not affect the levy as these helped Australians get their flood affected homes and lives back in order. But billions of dollars are still needed to fix vital infrastructure such as roads and bridges damaged by the floods and storms. The Commonwealth will meet two-thirds of these repair costs through budget cuts. The other third will be covered through this temporary levy.
Please note, our Tax Calculator does not include Flood Levy tax, so your actual salary might be a bit different.