Question:
Australian’s overseas: Foreign tax, Medicare and Flood levies
Answer:
Recent changes are outlined below:
July 1, 2022
- Loss carry back for eligible companies extended to cover 2023 income year.
- Professional firm profits diverted to the professional's spouse or other associates to be reviewed under new Tax Office guidance.
- Corporate collective investment vehicle legislative regime introduced.
- Temporary full expensing of depreciating assets extended to include 2023 income year.
- Depreciable assets of a company joining a tax consolidation group have tax costs setting rules modified for assets depreciated under temporary full expensing rules.
December 9, 2021
- Reduced Pandemic leave disaster payment of $750 per week made available through to 30 June 2022.
August 5, 2021
- COVID-19 Disaster Payments are non-assessable non-exempt income in 2021 income year and later. Payments phasing out as vaccination rates increase.
July 1, 2021
- New Investment Engagement Service launched for businesses planning significant new investments in Australia.
- Tax Office small business independent review service made permanent for businesses with turnover < $10m, for income tax, GST, exercise, luxury car tax, wine equalisation tax and fuel tax credits. Requested before amended assessment issued.
- Small business income tax offset for individuals increased to provide a reduction of 16% for a tax payable up to $1,000.
- Self-managed superannuation funds can now have six members, increased from four members previously.
July 1, 2021
- Some COVID -19 state and territory business grants received by small and medium enterprises are non-assessable, non-exempt income for 2021 and 2022 income years.
- Certain state, territory and local government financial support for individuals and businesses suffering COVID-19 impacts made exempt where businesses have turnover less than $50 million and only in eligible programs.
March 31, 2021
- JobKeeper payments scheme ended.
October 5, 2020
- Boosting apprenticeship commencements subsidy (up to 50% of apprentice's wages) is assessable income.
June 4, 2020
- Homebuilder grant for new home or substantial renovation construction is not subject to income tax.
April 1, 2020
- COVID-19 cash flow boost payments are not subject to income tax
Tax laws have been changed to allow Foreign Income Tax Offsets to be applied against the Medicare levy, Medicare levy surcharge and Flood levy with effect from the 2008-09 income tax year. This could be of substantial benefit for professionals that remain Australian tax residents whilst working overseas for a period of time.
Previously, the Tax Office said that your foreign income tax offsets could only be applied to the income tax component and not to these levies. This caused a very unfair circumstance where people working overseas that remained Australian tax residents were required to continue to pay these levies, in all likelihood did not get any benefit from the use of the medical services and did not get any offsetting for the foreign tax that they paid.
The Flood levy applies for the 2011-12 income tax year and will also be subject to the setoff against foreign income tax.
The Tax Office is using a “bulk amendment“ process to correct previous tax assessments for this beneficial, retrospective change. If you think they have missed you, you can contact the ATO as follows:
- Fax 1300 136 452 and reference “FITO – Medicare levy MEI30964”; or
- Mail them with the same reference to:
Team 1 – International
PO Box 1130
PENRITH NSW 4740
