On 10 February 2011, Tax Laws Amendment (Temporary Flood Reconstruction Levy) Bill 2011 and Income Tax Rates Amendment (Temporary Flood Reconstruction Levy) Bill 2011 were introduced into the House of Representatives. The following is extracted from the Explanatory Memorandum to the Bills.
The Tax Laws Amendment (Temporary Flood Reconstruction Levy) Bill 2011 and the Income Tax Rates Amendment (Temporary Flood Reconstruction Levy) Bill 2011 amend the ITAA 1997, the Income Tax Rates Act 1986 and the Income Tax (Transitional Provisions) Act 1997 to introduce a one-year progressive flood reconstruction levy in the form of additional income tax on Australian resident and foreign resident individuals in the 2011-12 financial year.
The amount of levy payable is at the rate of 0.5% where the taxpayer has a taxable income of between $50,001 and $100,000, and 1% where the taxpayer has a taxable income in excess of $100,000. No levy is payable where the taxpayer has a taxable income of $50,000 or less or where they fall into an exemption category.
Individuals who are in a class specified in a legislative instrument made by the Minister for the purpose of the levy will be exempt from the levy. In making the instrument, the Minister can only list a class of individuals as exempt if they were affected by a natural disaster in Australia in the 2010-11 and 2011-12 financial years.
When a trustee has income that is taxed as if the income was of an individual, they will be liable for the levy. This will ensure that trustees who pay tax in substitute of an individual will bear the same level of taxation as if the individual paid tax themselves.
The levy cannot be reduced by non-refundable tax offsets. That is, the taxpayer’s income tax liability for the 2011-12 financial year is calculated as the taxpayer’s basic income tax liability on taxable income less their tax offsets, to which the levy liability is then added.
For a copy of the Explanatory Memorandum to both Bills, go here