Flood Levy 2011Since the devastating floods that ripped through the east coast of Australia the Government has decided to impose a flood tax for the financial year 2011-2012 to help deal with the repair bill. But what does this mean for employers and employees? Flood Levy 2011-2012 Financial year Since the devastating floods that ripped through the east coast of Australia the Government has decided to impose a flood tax for the financial year 2011-2012 to help deal with the repair bill. But what does this mean for employers and employees?For Individuals - wage and salary earners, sole proprietor or trader If you earn over $50,000 a tax charge will apply of 0.5% for the amount over the $50,000 threshold, if you earn over $100,000 then the rate will go up to 1% for the amount over $100,000 plus $250. This tax will be withheld by your employer if you are a wage earner. If you pay PAYG instalments, the flood levy is included in your PAYG instalment amount. The ATO will send you a letter notifying you of your new instalment amount. It is then calculated on your end of year tax return. Scenario One – Bob earns $60,000 per annum. His flood levy for 2011-12 financial year will be- (Income – Threshold) * Levy (60,000 – 50,000) * (0.5 / 100) 10,000 * 0.005 = $50 flood levy payableScenario Two – Jim earns $120,000 per annum. His flood levy for 2011-2012 financial year will be – ((Income – Threshold) * Levy) + $250 ((120,000 – 100,000) * (1.0 / 100)) + 250 (20,000 * .01) + 250 200+250 =$450 flood levy payableThere are those who are exempt from paying the Flood levy. These persons are usually those who have been affected by a natural disaster and are not required to pay the levy, for a full list of requirements on exemptions please visit the ATO website
For employers, The flood levy should be incorporated into the tax withheld from employees. The new tax withholding schedules will be available on the ATO website from late June. If you use a computer payroll system you will need to install the new tax rates by updating your software. If an employee is exempt. Employees are not required to lodge declarations stating that they are exempt to you. If they do not let you know that they are exempt then the extra levy amount withheld will just be refunded at the end of the 2012 financial year when your employee lodges their tax return. It is important to also note that this flood levy is a temporary tax and will only be valid for the 2011-2012 financial yearTo calculate how much flood tax you will have to pay, follow this link to the ATO’s flood levy calculator For more information please call the office on (03) 9580 2419 or contact our Business Accountants here |
Call 1800 556 122
