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Ruling

Subject: Flood levy exemption

Question

Are you required to pay the Temporary Flood and Cyclone Reconstruction Levy (the flood levy) if your taxable income for the year ended 30 June 2012 exceeds $50,000?

Answer

Yes.

This ruling applies for the following period

Year ending 30 June 2012

The scheme commenced on

1 July 2011

This ruling applies for the following period

Year ending 30 June 2012

Relevant facts and circumstances

You are a holder of a temporary stay visa. This visa is not a subclass 444 visa.

You are not considered to be an Australian resident for social security purposes.

Relevant legislative provisions

Income Tax (Transitional Provisions) Act 1997 Section 4-10

Income Tax - Temporary Flood and Cyclone Reconstruction Levy Exemptions 2011 Schedule 1

Reasons for decision

Summary

You are liable to pay the flood levy if your taxable income exceeds $50,000 for the 2011-12 financial year. The imposition of the flood levy is not affected by a taxpayer's residency status.

Detailed reasoning

The Australian Government has introduced the flood levy for the financial year ended 30 June 2012. The flood levy is designed to assist affected communities to recover from the recent natural disasters by providing additional funding to rebuild essential infrastructure, such as, roads, bridges and schools.

Section 4-10 of the Income Tax (Transitional Provisions) Act 1997 states you must pay the flood levy where your taxable income for the 2011-12 financial year exceeds $50,000 unless you are covered by the exemption provision. The flood levy is an additional amount to the normal income tax calculated on your taxable income.

Your residency status does not affect the imposition of the flood levy. Thus, foreign residents who have an Australian taxable income in excess of $50,000 will pay the flood levy as will individual taxpayers who are Australian residents for tax purposes, irrespective of whether they are or are not residents for social security purposes.

The exemption provision requires the Minister to specify the classes of individuals in a legislative instrument who are not required to pay the flood levy. The legislative instrument Income Tax - Temporary Flood and Cyclone Reconstruction Levy Exemption 2011 outlines the three exemption classes. An individual's residency status for social security purposes or the visa they hold affects whether they meet the conditions of an exemption class. The three classes are:

Class 1 - you were eligible for an Australian Government Disaster Recovery Payment (AGDRP) for a natural disaster that occurred during the 2010-11 or 2011-12 financial year and you received the payment by 30 June 2012. To be eligible for an AGDRP you were required to be an Australian resident for social security purposes at the time of the disaster

Class 2 - you were affected by:

· an event that occurred during the 2010-11 or 2011-12 financial year which was declared as a natural disaster under the Natural Disaster Relief and Recovery Arrangements (NDRRA), and

· you were at least 16 years old at the time of the disaster, and

· you were an Australian resident for social security purposes at the time of the disaster, and

· at least one of the following conditions applies:

· as a direct result of the natural disaster:

· you were seriously injured, or

· an Australian was killed and that Australian was an immediate member of your family, or

· your principal place of residence was destroyed or sustained major damage, or

· you were unable to gain access to your principal place of residence for at least 24 hours, or

· you were stranded in your principal place of residence for at least 24 hours, or

· as a result of the natural disaster, your principal place of residence was without electricity, water, gas, sewerage service or another essential service for at least 48 hours, or

· you were the principal carer of a child (within the meaning of the Social Security Act 1991) to whom sub-paragraph (i) or (ii) applies.

Class 3 - you are a New Zealand citizen who arrived in Australia after 26 February 2001 under special category (subclass 444) visa who received an ex-gratia payment from Centrelink by 30 June 2012 for a natural disaster that occurred in the 2010-11 or 2011-12 financial year.

Application to your circumstances

The flood levy is imposed on all individual taxpayers who have Australian income in excess of $50,000 in the 2011-12 tax year irrespective of the residency status for either tax or social security purposes.

You are not exempt from paying the flood levy as you do not meet the conditions of any of the classes for exemption:

Class 1 and 2 do not apply as you are required to be an Australian resident for social security purposes for both of these classes, and

Class 3 does not apply as your visa is not a subclass 444 visa.

Accordingly, you are liable to pay the flood levy on that portion of your taxable income which exceeds $50,000 for the 2011-12 financial year.

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