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  • Definitions

    Child

    A child includes:

    • your child
    • your adopted child, stepchild or ex-nuptial child
    • a child of your spouse
    • someone who is a child of yours within the meaning of the Family Law Act 1975.

    Dependant

    There are three different categories of dependants:

    1. Dependant for Medicare levy surcharge purposes
    2. Dependant for Medicare levy or half levy exemption purposes
    3. Dependent child for Medicare levy family income reduction purposes.

    Dependant for Medicare levy surcharge purposes

    A dependant for Medicare levy surcharge purposes is a person wholly or partly maintained by you who is:

    • your spouse (of any sex)
    • a child aged under 21 years
    • a child aged 21 years to under 25 years who is a full-time student at a school, college or university.

    Dependant for Medicare levy or half levy exemption purposes

    A dependant for Medicare levy exemption purposes means a person who is:

    • a spouse (of any sex)
    • a child aged under 21 years
    • a child aged 21 years to under 25 years who is a full-time student at a school, college or university and has adjusted taxable income of less than $1,786 for the year.

    If both you and your spouse are in Medicare levy exemption Category 1 and you have dependent children who are not in any exempt category, one of you can claim a full levy exemption and the other a half levy exemption. You must complete a family agreement to nominate who will pay the half Medicare levy and keep it with your financial records.

    Dependent child for Medicare levy family income reduction purposes

    A dependent child for Medicare levy reduction purposes means a person maintained by you who is a child aged:

    • under 21 years who is not a full-time student and whose adjusted taxable income is less than $1,786 for the first child or $1,410 for any additional child
    • under 25 years and is a full-time student at a school, college or university and has adjusted taxable income of less than $1,786 for the year.

    If you were not married on the last day of the income year or were married but living apart from your spouse, you must have received family tax benefit for that child or student for some part of the income year for them to be considered a dependant for family income reduction purposes.

    Spouse

    Your spouse is a person (of any sex) who:

    • you are in a relationship with that is registered under a prescribed state or territory law
    • although not legally married to you, lives with you on a genuine domestic basis in a relationship as a couple.

    Spouse weekly income

    If the income of your spouse consists solely of salary or wages, the amount to be taken into account is the gross weekly earnings before tax. If your spouse has income other than earnings (for example, share dividends), you must take into account the weekly equivalent of all their income. To obtain this amount, divide their estimated taxable income from all sources by 52.

    Medicare levy – income for surcharge purposes

    A person's income for surcharge purposes for a financial year is the sum of their:

    • taxable income including the net amount you have paid family trust distribution tax on (excluding any First home super saver released amount)
    • exempt foreign employment income (if your taxable income is $1 or more)
    • reportable fringe benefits as reported on your payment summary or income statement
    • reportable super contributions (this includes both reportable employer superannuation contributions and deductible personal super contributions)
    • if you have a spouse, their share of the net income of a trust on which the trustee must pay tax (under section 98 of the Income Tax Assessment Act 1936) and which has not been included in their taxable income
    • total net investment loss (this includes both net financial investment loss and net rental property loss).

    If you were aged from your preservation age to under 60 years old, any taxed element of a super lump sum, other than a death benefit, which you received that does not exceed your low rate cap is excluded from your income for surcharge purposes.

    Last modified: 03 Jul 2019QC 17088