Private ruling: Flood levy exemption
Published: October 2012
Ruling period: Year ended 30 June 2012
Date scheme commenced: 1 July 2011

Ruling: Q1: 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 the relevant threshold? | A1: Yes.

Relevant facts and circumstances: You are a beneficiary of a trust that operates on a farming property. The property was affected by a natural disaster and the trust received a flood recovery and clean up grant under the Natural Disaster Relief and Recovery Arrangements (NDRRA). You incurred expenses cleaning up and rebuilding the property after the flood. You did not receive an Australian Government Disaster Relief Payment (ADGRP) as you did not meet the criteria for the payment. You do not meet the criteria for any of the three classes of exemption contained in the legislative instrument Income Tax - Temporary Flood and Cyclone Reconstruction Levy Exemption 2011 . You were not affected by any other natural disasters in the 2010-11 or 2011-12 financial years.

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: As you do not meet the criteria for an exemption you are required to pay the flood levy if your taxable income for the 2011-12 financial year exceeds the relevant threshold. | Detailed Reasoning - 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. The exemption provision requires the Minister to specify the classes of individuals in a legislative instrument who are not required to pay the levy. As stated in the legislative instrument you are not required to pay the levy if you are a member of one of the three exemption classes described below: Class 1 - you were eligible for an 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 Class 2 - you were affected by: (a) an event that occurred during the 2010-11 or 2011-12 financial year which was declared as a natural disaster under the NDRRA, and (b) you were at least 16 years old at the time of the disaster, and (c) you were an Australian resident for social security reasons at the time of the disaster, and (d) at least one of the following conditions applies: (i) as a direct result of the natural disaster: (A) you were seriously injured, or (B) an Australian was killed and that Australian was an immediate member of your family, or (C) your principal place of residence was destroyed or sustained major damage, or (D) you were unable to gain access to your principal place of residence for at least 24 hours, or (E) you were stranded in your principal place of residence for at least 24 hours, or (ii) 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 (iii) 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 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. | Detailed Reasoning - Application to your circumstances: You were the beneficiary of a trust whose farming property was affected by a natural disaster. The trust was eligible for a NDRRA flood recovery and cleanup grant. However you did not receive an AGDRP. Nor do you meet the Class 2 or Class 3 criteria for exemption from the flood levy under the legislative instrument in relation to this disaster. It is accepted that you may have suffered financially as result of the floods as you have incurred expenses in cleaning up and rebuilding the property. However there is no discretion contained within the relevant legislation to exempt you from the flood levy on this basis or on the basis that the trust received an NDRRA grant in relation to the natural disaster. You have not been affected by any other natural disasters in the 2010-11 or 2011-12 financial years. Accordingly, you will be liable to pay the flood levy on that portion of your taxable income which exceeds the relevant threshold for the 2011-12 financial year.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. If you have any concerns about this ruling you wish to discuss, you will find our contact details in the fact sheet.