Understanding a Recent Tax Case: Mr. Biswas vs. 7-Eleven Franchise
In this case, Mr. Biswas worked at a 7-Eleven store where he, along with many others, was paid unfairly low wages for long hours of work.
Initially, Mr. Biswas earned so little that he was exempt from paying the Medicare levy, a tax in Australia. However, by July 1, 2016, his income increased, and he was no longer exempt from this tax.
When it came to light that 7-Eleven franchisees were underpaying their employees, Mr. Biswas received a lump sum of $61,985 in the 2017 tax year, representing the wages he was owed from previous years.
Although Mr. Biswas declared this lump sum as taxable income in his 2017 tax return, he forgot to claim a tax offset for it, which could have reduced his tax liability.
Later, he corrected his mistake by amending his tax return to claim the offset. However, the tax office still applied a flat 2% Medicare levy on the lump sum.
Mr. Biswas disagreed with this, arguing that the levy shouldn't apply to the portion of the lump sum related to the time when he was exempt from paying it.
The Administrative Appeals Tribunal (AAT) reviewed the case. Despite Mr. Biswas's arguments, the AAT ruled against him, stating that the tax office correctly applied the Medicare levy on the entire lump sum payment.
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