Miscellaneous amendments to taxation laws 2011

Miscellaneous amendments ensure that the law operates as intended by correcting technical or drafting defects, removing anomalies and addressing unintended outcomes. Some of the amendments address issues raised through the Tax Issues Entry System.

Foreign income tax offset, Medicare levy and Medicare levy surcharge

Part 28 of the miscellaneous amendments measure included in Schedule 6 Tax Laws Amendment (2011 Measures No. 9) Act 2012 contains changes to the foreign income tax offset to correct an unintended outcome. Australian residents, who have paid foreign income tax in respect of an amount of foreign income included in their assessable income, are eligible for a foreign income tax offset.

The amendments allow the excess foreign income tax offset for an income year that remains after being applied against a taxpayer's basic income tax liability, to be first used to reduce any liability to pay Medicare levy for that income year and if any remains, to reduce any liability to pay Medicare levy surcharge for the income year.

The changes apply for the 2008-09 income year and later years.

Legislation and supporting material

The following act received royal assent on 21 March 2012:

• Tax Laws Amendment (2011 Measures No. 9) Act 2012, and the
• Explanatory Memorandum.

Administrative treatment Taxpayers that have an amount of foreign income tax offset left after first applying it against their basic income tax liability will be entitled to an amendment to have any excess foreign income tax offset applied against their liability to pay Medicare levy or Medicare levy surcharge. We will apply the offset against a taxpayer's Medicare levy and Medicare levy surcharge in all individual income tax returns lodged or amended from July 2012. We are investigating whether a bulk amendment process is possible to process amendments for prior years. We will provide further advice as it becomes available. Interest on overpayments will be payable on any amendment that results in a refund. If a taxpayer has an outstanding debt that will be affected by the law change, they should contact us on 13 11 42 to discuss this.

More information For more information about the changes and the amendment process, refer to Applying a Foreign Income Tax Offset against Medicare levy, Medicare levy surcharge and Flood levy.