• 51 Other Refundable Tax Offsets

    Exploration Credit Tax Offset

    Show at G the total exploration credits received by the trust during the income year (including any exploration credits received indirectly through a partnership or other trust) and print E in the code box.

    Show the beneficiaries and trustee's share of the exploration credit tax offset at this item and at item 54 Statement of distribution.

    See also:

    52 Medicare levy reduction or exemption

    A trustee needs to complete this item only if all of the following conditions apply:

    • The trustee is liable to be assessed on a share of the net income of the trust because a beneficiary is presently entitled to a share of the income of the trust (or specifically entitled to an amount of capital gains or franked distributions) but under a legal disability.
    • That amount of the net income of the trust upon which the trustee is liable to be assessed in respect of a particular beneficiary is more than the relevant threshold amount for the Medicare levy as set out in part A of Question M1 in the Individual tax return instructions 2016.
    • That beneficiary qualifies for an exemption or reduction in the Medicare levy under one of the categories set out in Question M1 in the Individual tax return instructions 2016.

    If there is more than one such beneficiary, provide a statement on a separate sheet of paper setting out the information required at this item for each additional beneficiary. Attach the statement to the tax return and print X in the Yes box at Have you attached any ‘other attachments’? at the top of page 1 of the tax return.

    Spouse’s 2015–16 taxable income

    Show at A the taxable income of the beneficiary’s spouse for 2015–16. If the beneficiary had no spouse or had a spouse who had no taxable income, write zero (0) at A.

    Number of dependent children and students

    Show at B the number of the beneficiary’s dependent children and students, if any.

    C and D

    For details of the various Medicare levy exemption categories, see Question M1 in the Individual tax return instructions 2016.

    Full Medicare levy exemption – number of days

    Show at C the number of days in 2015–16 for which the beneficiary was entitled to the full Medicare levy exemption. If you have completed C and the beneficiary has been issued with a statement from the Medicare Entitlement Statement Unit of the Department of Human Services showing that the beneficiary is not entitled to any Medicare benefits, print C in the Code box.

    Half Medicare levy exemption – number of days

    Show at D the number of days during 2015–16 for which the beneficiary was entitled to a half Medicare levy exemption.

    Medicare levy on net income assessed to the trustee under sections 99 or 99A of the ITAA 36

    If a trustee is liable to be assessed on that part of the net income of a trust (other than a trust of a deceased person) under either sections 99 or 99A of the ITAA 1936 the trustee may need to pay the Medicare levy.

    If a trustee is assessed on part or all of the net income of a trust under either sections 99 or 99A of the ITAA 36 and is liable to pay tax on all of the income so assessed at the top marginal tax rate, the trustee must pay the Medicare levy at 2% of net income.

    In other situations, if the net income assessed to the trustee is:

    • $416 or less, no Medicare levy is payable
    • $417 to $520, the Medicare levy is 10% of the excess over $416
    • more than $520, the Medicare levy is 2% of the net income assessed to trustee.

    For a trust of a deceased person, no Medicare levy is payable on that part of the net income of the trust that is assessed under either sections 99 or 99A of the ITAA 1936.

    Medicare levy surcharge

    If the beneficiary’s share of the trust net income to which a trustee is assessed under section 98 exceeds either $90,000 (if single) or $180,000 for the family surcharge threshold (plus $1500 for each dependent child after the first) the trustee may be liable for the Medicare levy surcharge (MLS). See Question M2 in the Individual tax return instructions 2016.

    Provide a statement on a separate sheet of paper showing:

    • the trust's name
    • the trust's TFN
    • the beneficiary’s name
    • the beneficiary’s TFN
    • the beneficiary’s share of the net income of the trust estate
    • the number of days not liable for MLS
    • the full name of beneficiary’s spouse, if applicable
    • if the beneficiary did not have a spouse for the full year (the period they had the spouse)  
      • the date from which the beneficiary had a spouse
      • the date to which the beneficiary had a spouse
       
    • if the beneficiary's spouse died during the year
    • the spouse’s income for (Medicare levy) surcharge purposes, if applicable
    • the number of dependent children, if applicable
    • the health insurer identification (ID) code, if applicable
    • the membership number, if applicable.

    Sign the statement, attach it to the tax return and print X in the Yes box at Have you attached any ‘other attachments’? at the top of page 1 of the tax return.

    The definition of dependant for the purposes of MLS differs from the definition of dependant for other tax purposes (such as net medical expenses tax offset).

    The beneficiary’s and their spouse’s income for MLS purposes must be calculated:

    • ignoring the exemption under section 271-105 of Schedule 2F to the ITAA 1936 for distributions on which family trust distribution tax (FTDT) has been paid; for more information about the circumstances in which FTDT is payable, see Family trust distribution tax
    • excluding the taxed element of a superannuation lump sum, other than a death benefit, that they received when they were over their preservation age and under 60 years old that does not exceed their low-rate cap amount.
    Medicare levy surcharge rate

    The amount of Medicare levy surcharge (MLS) payable may increase depending on the beneficiary’s income for (Medicare levy) surcharge purposes.

    The rates are detailed in Question M2 in the Individual tax return instructions 2016.

    The following table shows 2015-16 financial year's MLS thresholds and rates, based on income for (Medicare levy) surcharge purposes:

     

    Unchanged

    Tier 1

    Tier 2

    Tier 3

    Singles

    $0 - $90,000

    $90,001 - $105,000

    $105,001 - $140,000

    $140,001 and above

    Families*

    $0 - $180,000

    $180,001 - $210,000

    $210,001 - $280,000

    $280,001 and above

    Medicare levy surcharge

    Rates

    0%

    1%

    1.25%

    1.5%

    * The families’ threshold is increased by $1,500 for each dependent child after the first. Families include couples and single parent families.

    Income for (Medicare levy) surcharge purposes is only used to determine whether the beneficiary is liable to pay the MLS. It is not used to calculate the surcharge amount.

    The MLS is only levied on the total of the beneficiary’s:

    • taxable income
    • reportable fringe benefits amount, and
    • any amount on which family trust distribution tax has been paid.

    If the beneficiary is over their preservation age and under 60 years old, MLS is not levied on any taxed element of a super lump sum they received (other than a death benefit) that does not exceed the low rate cap.

    For more information about income for surcharge purposes and the components used to calculate it, see Income for Medicare levy surcharge, thresholds and rates.

    Last modified: 31 Aug 2016QC 48243