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  • Medicare levy surcharge

    If you have to pay the Medicare levy, you may have to pay the Medicare levy surcharge (MLS) if you, your spouse and your dependent children do not have an appropriate level of private patient hospital cover and you earn above a certain income.

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    What is the Medicare levy surcharge?

    The MLS is designed to encourage people to take out private patient hospital cover and use the private hospital system. This will reduce demand on the public Medicare system.

    The MLS is levied on your:

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

    We use a special definition of income (called income for MLS purposes) to work out if you have to pay the MLS and the rate you will pay. This income is different from your taxable income.

    If you've paid the MLS and you want to avoid paying it in the future, you can take out the appropriate level of private patient hospital cover for yourself, your spouse and all your dependants.

    Medicare levy surcharge rates and thresholds

    The MLS rate of 1%, 1.25% or 1.5% is levied on:

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

    The base income threshold (under which you are not liable to pay the MLS) is:

    • $90,000 for singles
    • $180,000 (plus $1,500 for each dependent child after the first one) for families.

    However, if you had a spouse for the full year, you do not have to pay the MLS if:

    • your family income exceeds the $180,000 (plus $1,500 for each dependent child after the first one), but
    • your own income for MLS purposes was $23,226 or less.

    If you had a new spouse, or you separated from your spouse, during the year:

    • you may be liable for MLS for the number of days you were single – if your own income for MLS purposes was more than the single surcharge threshold of $90,000
    • you may be liable for MLS for the number of days you had a spouse or dependent children – if your own income for MLS purposes was more than the family surcharge threshold of $180,000 (plus $1,500 for each dependent child after the first one).

    We will work out if you have to pay the MLS based on the information you provide in your tax return. We will include MLS with your Medicare levy. It will show as one amount on your notice of assessment, called Medicare levy and surcharge.

    See also:

    Medicare levy surcharge in your tax return

    The private health insurance statement you receive from your insurer includes information that relates to the Medicare levy surcharge.

    It will include the number of days that your policy provided the appropriate level of private health hospital cover, as shown below.

    Number of days this policy provides an appropriate level of private patient hospital cover

    A

    365

    A Medicare levy surcharge may apply if you, your spouse and all your dependants did not maintain an appropriate level of private patient hospital cover for the full income year. Use the number of days listed at A to help you complete the Medicare levy surcharge question on your tax return.

    See also:

    Income for Medicare levy surcharge purposes

    Income for Medicare levy surcharge (MLS) purposes is used to work out whether you have to pay the MLS and the rate you will pay.

    If you have a spouse, we will use your combined income for MLS purposes.

    Your income for MLS purposes is the sum of the following items for you (and your spouse, if you have one):

    If you had exempt foreign employment income, add it to your taxable income if your taxable income is $1 or more.

    If you meet the following conditions, you can reduce income for MLS purposes by any taxed element of the super lump sum, other than a death benefit, that does not exceed your (or your spouse's) low rate cap:

    • you (or your spouse) are aged from your (or their) preservation age to under 60 years old, and
    • you (or your spouse) received a super lump sum.

    Change in circumstances during the year

    If circumstances for yourself, your spouse or your dependent children change at any time during the year, you may become liable to pay the MLS.

    Changes in circumstances may relate to your:

    • income
    • spouse
    • dependants
    • private health insurance.

    Find out about:

    Last modified: 01 Jul 2021QC 27040