Private ruling: Flood levy exemption
Published: May 2012
Ruling period: Year ending 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 $50,000? | A1: Yes.

Relevant facts and circumstances: Your town was affected by a natural disaster. You were affected by the natural disaster in the following ways: · your workplace was closed for a period of time. You were paid for this time but had to work the equivalent of the hours missed once your workplace reopened · you took time off work to assist friends and family to evacuate prior to the natural disaster occurring, and · friends and family lived with you for a number of weeks after the natural disaster. You did not receive an Australian Government Disaster Relief Payment (AGDRP). You state in your application your situation does not fit directly into a flood levy exemption class in relation to the natural disaster. You have not been affected by any other natural disaster in the 2010-11 or 2011-12 financial years.

Relevant legislative provisions: Income Tax (Transitional Provisions) Act 1997 Section 4-10 and 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 $50,000. | 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 Income Tax - Temporary Flood and Cyclone Reconstruction Levy Exemption 2011, 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 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 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 reasons 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 (SSA)) 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: Your town was affected by a natural disaster. The Attorney-General determined the natural disaster to be a major disaster under section 36 of the SSA. This determination set the circumstances in which a person is adversely affected. The determination activated AGDRP assistance for people who were adversely affected by the results of the natural disaster. A person applies for an AGDRP by nominating that their circumstances, including their partner and children's circumstances (if appropriate), satisfied the criteria for being adversely affected by the natural disaster. Persons confirmed as satisfying the criteria were eligible for an AGDRP under Part 2.24 of the SSA as a result of a natural disaster. You advise you do not meet the criteria of any of the three classes for exemption from the flood levy specified in the legislative instrument in relation to the natural disaster. It is accepted that you may have been affected by the natural disaster by working additional hours once your workplace reopened, assisting others to evacuate and providing accommodation to friends and family after the natural disaster. However there is no discretion contained within the relevant legislation to exempt you from the flood levy on this basis. You have not been affected by any other natural disaster 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 $50,000 for the 2011-12 financial year.

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