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You may also be liable for Medicare levy surcharge (MLS) in addition to the Medicare levy. Individuals and families on incomes above MLS thresholds, who do not have an appropriate level of private patient hospital cover, pay MLS for any period during the year that they did not have this cover. However, if you are exempt from the Medicare levy, you not have to pay MLS.
From 1 July 2012, if you become liable for MLS, your MLS rate can either be 1%, 1.25% or 1.5%. Prior to this, the MLS rate was 1%.
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.
Table 1: Income thresholds
$84,000 or less
$84,001 - $97,000
$97,001 - $130,000
$130,001 or more
$168,000 or less
$168,001 - $194,000
$194,001 - $260,000
$260,001 or more
Medicare levy surcharge rate
The MLS rate is applied to:
If you have to pay the surcharge, it will be included with the Medicare levy and shown as one amount on your notice of assessment called Medicare levy and surcharges.
If you want to work out the Medicare levy surcharge, use our Comprehensive tax calculatorThis link opens in a new window.
For assistance completing your tax return, see M2 Medicare levy surcharge (MLS)
When don't you have to pay the surcharge?
You do not have to pay MLS if, for the whole of the income year, you and all your dependants (including your spouse):
When do you have to pay the surcharge?
You may have to pay MLS for any period during the year that you or any of your dependants did not have an appropriate level of private patient hospital cover for the whole income year and your income for MLS purposes was above a certain amount.
Appropriate level of private patient hospital cover
An appropriate level of private patient hospital cover is cover provided by an insurance policy issued by a registered health insurer for some or all hospital treatment provided in an Australian hospital or day hospital facility which has an excess of:
Whether you have to pay MLS depends on your family circumstances – for example, the income for MLS purposes thresholds are higher if you have dependent children.
Income for MLS purposes
The rate of MLS that you may have to pay depends on your income for surcharge purposes. This is referred to as your income for MLS purposes, which is the sum of your:
Include exempt foreign employment income in income for MLS purposes if your or your spouse's taxable income is $1 or more.
If you are aged 55–59 years, reduce income for MLS purposes by any taxed element of a super lump sum (other than a death benefit) which you received that does not exceed your low rate cap.
Each of these terms has a specific meaning.
To work out your income for Medicare levy surcharge purposes, use our Income for (Medicare levy) surcharge purposes calculatorThis link opens in a new window.
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