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May 15

Australian’s overseas: Foreign tax, Medicare and Flood levies

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

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CONSULTING ACCOUNTANTS . TAXATION SPECIALISTS . BUSINESS IMPROVEMENT