As part of the 2014–15 Federal budget the government introduced a temporary budget repair levy.
Individual taxpayers with a taxable income of more than $180,000 per year will have additional tax withheld by their employer, starting from 1 July 2014.
The levy is payable at a rate of two per cent of each dollar of a taxpayer’s taxable income over $180,000.
It will apply to both resident and non-resident individuals from 1 July 2014 and applies to the 2014–15, 2015–16 and 2016–17 income years.
In some cases the levy is payable even if you have a taxable income of $180,000 or less. For example, the unearned income of resident individuals under the age of 18 is subject to special rates.
The levy is payable at two per cent on either the:
- excess over $416 if your unearned income is between $417–$1,307
- entire amount of your unearned income if it is over $1,307.
The tax tables have been updated so that employers can withhold the appropriate amount of tax and levy.
The levy has ceased to apply from 1 July 2017.
Information for employers
Employers should use the ATO’s updated tax tables to calculate the tax to withhold from their employees’ pay. Employers using accounting software should contact the software provider for payroll updates.
If you are an individual taxpayer, the levy is calculated separate to your basic income tax liability.
Most non-refundable tax offsets can't be used to reduce your levy liability. Even if you have non-refundable tax offsets that exceed your basic income tax liability, you will still have to pay the levy.
However, if you are entitled to the foreign income tax offset, it can be used to reduce your levy.
Taxes and rates impacted
The levy will apply to:
- individual taxpayers
- unearned income of minors
- trustees liable to taxation as individuals
- trustees liable under section 99A
- trustees liable under subsection 98(4)
- non-complying superannuation funds
- non-arm's length component of the taxable income of a superannuation fund
- non-complying approved deposit funds
- non-arm's length component of the taxable income of an approved deposit fund
- non-arm's length component of the taxable income of a pooled superannuation trust
- non-TFN contributions income to a superannuation fund or retirement savings account provider
- share of the net income of a partnership attributable to a partner not having control and disposal of that income
- family trust distribution tax
- fringe benefits tax (starting 1 April 2015)
- income tax on bearer debentures
- TFN withholding tax for employee share schemes
- departing Australia superannuation payments tax (3% increase for payments from a taxed superannuation fund and 2% increase for payments from an untaxed superannuation fund)
- excess non-concessional contributions tax
- excess untaxed roll-over amounts tax
- trustee beneficiary non-disclosure tax No 1
- trustee beneficiary non-disclosure tax No 2
- interest on non-resident trust distributions
- untainting tax
- trust recoupment tax.