THE DIFFERENCE BETWEEN MEDICARE LEVY
AND MEDICARE LEVY SURCHARGE.
Medicare Levy is applied to all tax returns where the taxable income of the taxpayer
is above $23,365 regardless of whether the taxpayer has private health insurance or not. The current rate is 2% of the taxable income.
Medicare Levy Surcharge (MLS) may be payable in addition to the Medicare Levy if you, your spouse and your dependent children do not have an appropriate level of private hospital cover and you earn above a certain income.
A special definition of income is used to work out if you have to pay the Medicare Levy Surcharge and the rate you have to pay.
The elements taken into consideration include:
- Your taxable income
- Total reportable fringe benefits
- Any amount on which family trust distribution has been paid
The base income threshold (under which you are not liable to pay the Medicare Levy Surcharge) is:
- $90,000 for singles
- $180,000 for families
The rates used are 1%, 1.25% or 1.5%, depending upon the level of income calculated.
For families, the combined income of both spouses is taken into consideration, together with the number of dependent children.
If it is likely, when the return is prepared, that Medicare Surcharge Levy may apply, an estimate will be included on the estimate page of the return with the Medicare Levy.
When the return is lodged, the ATO will work out if Medicare Surcharge Levy is payable based on the information provided in the return. The result will be included as one amount on the notice of assessment as Medicare Levy and Surcharge.
For further information, please contact our office.