Wise Lord & Ferguson, Chartered Accountants, Hobart, Tas

Update 12/04/2011: The Flood Levy has received Royal Assent and is now law.

The Australian Government has announced a new one-year progressive “flood levy” which is aimed to help fund the rebuilding of flood-affected regions. The levy will only apply in respect to the 2011-12 financial year. Those affected by the floods and who received an Australian Government Disaster Recovery Payment for a flood event in 2010-11 will not have to pay the levy. Low income earners will also be exempt. 

The levy will be collected in the same manner as the existing Medicare Levy. Collection for individuals with business income will occur on lodgement of 2012 Income Tax Returns. Collection for salary and wage income will take place through tax withheld from regular salary. 

Employers will need to ensure they update their Pay As You Go Withholding tax schedules within their payroll software to ensure tax including the levy is deducted from employee’s salary at the correct rate. 

The rate at which the levy is paid is based on an individual’s taxable income and is explained in the table below:

Taxable income	Flood levy payable during the 2012 financial year
0 to $50,000	Nil
$50,001 to $100,000	0.5% of taxable income in excess of $50,000
$100,001 +	0.5% of taxable income between $50,001 and $100,000 and 1% of taxable income in excess of $100,000

For example: 

Someone earning $30,000 in 2011-12 will not pay the levy. 

Someone earning $60,000 in 2011-12 will pay $50 for the year 2012 or 96 cents per week calculated as: 

            [ ($60,000 - $50,000) x 0.5%] / 52

 Someone earning $120,000 in 2011-12 will pay $450 for the year 2012 or $8.65 per week calculated as: 

            [ ($100,000 - $50,000) x 0.5%] + [ ($120,000 - $100,000) x 1%] / 52 

For more information or to make an appointment to discuss your circumstances, please call your usual contact at Wise Lord & Ferguson on (03) 6223 6155 or email@wlf.com.au