Senate

Revised Explanatory Memorandum

(Circulated by the authority of the Deputy Prime Minister and Treasurer, the Hon Wayne Swan MP)

General outline and financial impact

Introduction of the Temporary Flood and Cyclone Reconstruction Levy

The Tax Laws Amendment (Temporary Flood and Cyclone Reconstruction Levy) Bill 2011 and the Income Tax Rates Amendment (Temporary Flood and Cyclone Reconstruction Levy) Bill 2011 amend the Income Tax Assessment Act 1997 (ITAA 1997), the Income Tax Rates Act 1986 (ITRA 1986) and the Income Tax (Transitional Provisions) Act 1997 (IT(TP) Act 1997) to introduce a one-year progressive flood and cyclone reconstruction levy in the form of additional income tax on Australian resident and foreign resident individuals in the 2011-12 financial year. These changes will ensure that those with a greater capacity to pay make a larger contribution to the rebuilding of disaster affected regions of Australia through revenue raised by the levy.

Date of effect : The levy is payable for the 2011-12 financial year.

Proposal announced : This measure was announced by the Prime Minister in Media Release, Rebuilding after the floods of 27 January 2011.

Financial impact : This measure will have these revenue implications:

Compliance cost impact : This measure is expected to result in a very minor overall compliance impact, comprising a very minor increase in compliance costs for some individuals and employers with pay as you go withholding obligations with respect to the 2011-12 financial year.