Avoid paying the Medicare Levy Surcharge!

Understand the basic Medicare Levy System in Australia

When you are entitled to get benefits from the Australian health care system, there is two different additional taxes paid on top of your personal income tax:

-The compulsory contribution paid by all Australian residents which is a Medicare Levy based on 1.5 % of your taxable income.

-The Medicare Levy Surcharge if your total income is above specific thresholds by person or family, and you do not have an appropriate level of private patient hospital cover recognised in Australia.

1)      The Medicare Levy :

Medicare is the scheme that gives Australian residents access to health care.

You can only get benefits from the Medicare Australian system if you are either:

-          An Australian citizen living in Australia

-          Applying for permanent residency and living in Australia

-          A New Zealand citizen living in Australia

-          A Permanent resident living in Australia

     

  • Reduction for people on low incomes

Your Medicare levy is reduced to nil if your taxable income is below $32,379.

     

  • Medicare Levy Exemption

You may be exempt from paying the Medicare Levy if you are a foreign resident or a temporary resident (e.g. visa 457) not entitled to Medicare benefits. In that case, you need to apply for a Medicare Levy Exemption available when you contact your registered Tax Agent.

2)      The Medicare Levy Surcharge (MLS) :

The surcharge is in addition to the Medicare Levy if you do not have appropriate private patient hospital cover.

If your income for MLS purposes is above the base income threshold the ATO will apply the rate of MLS that corresponds with your income for MLS purposes. If you have a spouse (married or defacto) your combined income for MLS purposes will be used.


Unchanged

Tier 1

Tier 2

Tier 3

Singles $84,000 or less $84,001 - $97,000 $97,001 - $130,000 $130,001 or more
Families $168,000 or less $168,001 - $194,000 $194,001 - $260,000 $260,001 or more
Medicare levy surcharge rate 0% 1% 1.25% 1.5%
     

  • Few tips to remember:

-          When filing your annual tax return, be sure to report the spouse section to ensure you can waive the MLS if your combined taxable income is $168,000 or less.

-          Subscribe before the 30/06 for a private health insurance in Australia : you will therefore be totally exempt from the MLS on your next tax return (365 days exemption).

-          Be careful if you have received some Fringe Benefits because the MLS rate applied on your taxable income + total reportable fringe benefits + reportable super contributions.

Contact your registered Tax agent to optimise your Medicare Levy Surcharge if applicable