Medicare
Levy Surcharge
What
is the Medicare levy surcharge? (source
ATO)
Medicare is the scheme that gives
Australian residents access to health care.
To help fund the scheme, resident
taxpayers are subject to a Medicare levy.
Normally, we calculate your Medicare
levy at the rate of 1.5% of your taxable income.
A variation to this calculation may occur in certain circumstances.
Generally, tax offsets do not reduce
your Medicare levy. However, if you have excess refundable tax offsets,
we use them to reduce your tax, including your Medicare levy. For more
information see Private health insurance rebate.
Most Australians are liable to pay the
Medicare levy. The standard levy is 1.5% of your taxable income.
However, this may vary according to your circumstances.
In some cases you may be exempt from
the levy or it may be reduced.
Read:
to work out if you are eligible for
the exemption or the reduction based on family income.
Individuals and families on incomes
above the Medicare levy surcharge thresholds, who do not have private
patient hospital cover, may have to pay the Medicare levy surcharge.
This surcharge is in addition to the
Medicare levy. We calculate it at the rate of 1% of your taxable income
(including your total reportable fringe benefits). You will need to
read Medicare levy surcharge
to see if you have to pay the surcharge.
Taxable
income
Your taxable income is usually the
amount you wrote at taxable income or loss on page 3 of your tax
return. For Medicare levy purposes, taxable income excludes the amount
of any post-June 1983 component of an eligible termination payment on
which the maximum tax rate is zero.
 Note
If you had exempt foreign employment
income you will not be able to work out your Medicare levy. We will do
this when working out the amount of tax (including Medicare levy) you
have to pay on your other income.
If you want to work out your Medicare
levy before you receive your notice of assessment, you can use the Medicare levy calculator.
Medicare levy surcharge (MLS)
The Medicare levy surcharge has been
in place since 1 July 1997 with the aim of encouraging high income
earners to take out private hospital cover, and where possible, to use
the private system to reduce the demand on the public system.
The Medicare levy surcharge is an
additional 1% surcharge of taxable income imposed on high income
earners, who are eligible for Medicare but who do not have an
appropriate level of hospital insurance with a registered health fund.
The Medicare levy surcharge is in addition to the normal 1.5% Medicare
levy.
Who must pay the Medicare levy
surcharge
You have to pay the surcharge if you
are a high-income earner and you do not have a private hospital
insurance policy with a low front-end deductible or excess.
High-income is defined as:
- a single person with an annual
taxable income greater than $50,000 or
- a family or couple with a combined
taxable income greater than $100,000. The family income threshold
increases by $1,500 for each dependent child after the first
Low Front-End Deductible or Excess is
defined as:
- equal to or less than $500 per
annum for single policies or
- $1,000 per annum for
families/couples
You must also pay the Medicare levy
surcharge if you are a prescribed person* with a taxable income over
the threshold, and have any dependents who are not prescribed persons
and who are not covered by a low front-end deductible hospital
insurance policy with a registered health fund.
* Generally,
you will know if you are a prescribed person. If you need more
information on prescribed persons, call the Australian Taxation Office
(ATO) Helpline on 13 28 61.
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Your dependants in relation to the
Medicare levy surcharge
Providing you contribute to their
maintenance (including child support payments), your dependents are:
- your spouse
- any of your children who are under
16 years of age
- any of your student children who
are under 25 years of age
The Medicare Levy Surcharge is in
addition to the normal 1.5% Medicare Levy.
You do not have to pay the surcharge
if:
- your taxable income is below the
income threshold;
- your taxable income is over the
income threshold and you have hospital insurance for you and all of
your dependants with a low front-end deductible with a registered
health fund;
- you are normally exempt from the
Medicare Levy because you are a prescribed person and you do not have
any dependants. Your taxable income is not considered in this case
- you are a high income earner who
had already purchased a hospital insurance product with a front-end
deductible greater than $500 for singles or $1,000 for
families/couples, on or before 24 May 2000. In this case you will
continue to be exempt from the Surcharge while ever you maintain
continuous membership to the same hospital table.
Notes about the surcharge
To be exempt from the surcharge, your
hospital cover must be held with a registered health benefits
organisation (health fund) that covers some or all of the fees and
charges for a stay in hospital. Information as to whether your health
fund is registered can be obtained from the Private Health Insurance
Administration Council (PHIAC) by phoning their office on 02 6215 7900.
Ancillary or extras
cover does not constitute private patient hospital cover
for the purposes of the surcharge.
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Low Front-End Deductible
Your front end deductible or excess
must be equal to or less than $500 per annum for single policies or
$1,000 per annum for families/couples to be considered a low front end
deductible or excess.
For more information
For more information about the
Medicare Levy Surcharge, contact the Australian Taxation Office (ATO)
by:
- calling the A Fax From Tax line
13 28 60
- calling the ATO Helpline
13 28 62
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