Medicare Levy Surcharge
The Medicare Levy Surcharge (MLS) was introduced on 1 July 1997 to encourage those on higher incomes to take out private hospital cover. The MLS is an extra tax of 1% and is in addition to the normal 1.5% Medicare Levy.
In October 2008, legislation was passed to raise the the MLS threshold for singles from $50,000 to $70,000 per year. For couples and families, the threshold was raised from $100,000 to $140,000 per year. These changes will apply to your income tax return for the 2008/2009 financial year and all following years. In future the threshold will be indexed against average wages.
Proposed Further Federal Government Changes
In the 2009-10 Budget, the Australian Government proposed changes to both the Private Health Insurance Rebate and the Medicare Levy Surcharge (MLS) tax rates. The changes are not proposed to take effect until July 2010 and require senate approval to become legislation.
Who must pay the Medicare Levy Surcharge?
Financial Year 2008-2009
You have to pay the MLS if you do not have an eligible private hospital insurance policy and have an annual taxable income* of greater than $70,000 for singles or greater than $140,000 for families. The family income threshold increases by $1,500 for each dependent child after the first.
So singles with an MLS liability can expect to pay an extra tax of at least $700 pa and families will pay $1400 pa or more.
Financial Year 2009-2010
You have to pay
the MLS if you do not have an eligible private hospital insurance
policy and have an annual taxable income* of greater than $73,000 for
singles or greater than $146,000 for families. The family income
threshold increases by $1,500 for each dependent child after the first.
So singles with an MLS liability can expect to pay an extra tax of at least $730 pa and families will pay $1460 pa or more.
* including Reportable Fringe Benefits
Avoid the Medicare Levy Surcharge
With access to a huge selection of policies from a range of health funds, HICA can help you identify a suitable high value hospital policy and avoid the MLS for the period covered.
To take advantage of HICA's free service, simply submit your preferences. Many HICA clients save $100's per year on their health insurance premiums... and benefit from appropriate cover. So start now by telling us about your needs. It's free and there's no obligation.
For more information
Further details about the Medicare Levy Surcharge
Or call HICA on 1300 732 757
The information provided on this website does
not constitute financial advice or tax advice. If
you require financial or tax advice about your
specific situation, you should contact your
financial advisor or a tax expert.
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