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  • Completing your tax return

    This section explains how to complete the parts of your tax return that relate to the Medicare levy and health insurance.

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    Completing your private health insurance policy details

    To make it easier for you to complete your tax return, the description of labels on your private health insurance statement match the private health insurance labels on your tax return. Write or type these amounts on your tax return.

    For example:

    • take the figure at Your Australian Government rebate received on your private health insurance statement, and
    • copy this figure to the Your Australian Government rebate received label on your tax return.

    Follow this process for all labels.

    Completing the private health insurance labels correctly on your tax return will prevent delays in processing and ensure you receive your correct rebate entitlement.

    If you have more than one line on your statement, enter all the lines separately on your tax return following the Individual tax return instructions. If the instructions require you to enter the dollar amounts from your statement, do not add any of those dollar amounts together – enter them separately, as displayed on your statement.

    If you are claiming the rebate for your spouse, refer to the Individual tax return instructions.

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    Completing your Medicare levy related items

    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 in Figure 1.

    Figure 1: Medicare levy surcharge details shown on a sample private health insurance statement

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

    A

    365

    Note: A Medicare levy surcharge may apply if you 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.

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    Tax claim codes

    The tax claim code you provide on your tax return is important because it can affect the amount of private health insurance rebate you are entitled to receive.

    Tax claim codes do not appear on your private health insurance statement. This means you will need to select a code from the tables below that best describes your circumstances:

    Once you have selected a code, write or type the code letter on your tax return.

    Table 16: Single adult

    Your circumstances

    Tax claim code for your tax return

    You are a single adult on 30 June 2018

    A

    You are a single adult on 30 June 2018 and have a dependent child or children

    B

    Table 17: Adult (with or without dependants) who has a spouse 

    Your circumstances

    Tax claim code for your tax return

    You have a spouse on 30 June 2018 (including if your spouse died during 2017–18 and you did not have another spouse before 30 June 2018).

    C

    You have a spouse on 30 June 2018 and they have agreed that you should claim their share of the rebate in your tax return because they aren't claiming it themselves – see Claiming the rebate for your spouse.

    You will use your spouse's statement to enter your spouse's share private health insurance details into your return.

    • C for your rebate claim (your first entry)
    • D for the rebate you are claiming on behalf of your spouse (including if your spouse died during 2017–18 and you did not have another spouse before 30 June 2018). This will be your second entry.

     

    You have a spouse on 30 June 2018 and you have agreed that they should claim your share of the rebate in their tax return because you aren't going to claim it yourself – see Claiming the rebate for your spouse.

    E

    Table 18: Adult who paid for a dependent child only policy

    Your circumstances

    Tax claim code for your tax return

    A dependent child or children are the only people on the policy and the parent claiming the rebate (or the payer of the policy premiums) has a spouse.

    C

    A dependent child or children are the only people on the policy and the parent claiming the rebate (or the payer of the policy premiums) does not have a spouse – see Claiming for a dependent child only policy.

    B

    Table 19: Person covered as a dependent child on a private health insurance policy (with their family or independently)

    Your circumstances

    Tax claim code for your tax return

    If you are covered as a dependent child on a private health insurance policy, you are not entitled to receive the rebate.

    Dependent children need to type or write their private health insurance details (membership number and health insurer ID) in their tax return, including the tax claim code F if their income is above the threshold so they do not have to pay the Medicare levy surcharge.

    F

    Your rebate entitlement depends on how much income you have earned.

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    Claiming the rebate for your spouse

    Under certain circumstances, you can choose to claim your spouse’s rebate entitlement (as well as your own) in your tax return. To be able to claim the rebate for your spouse, you must satisfy the following three conditions:

    • You must have a spouse on the last day of the income year (including if your spouse died during 2017–18 and you did not have another spouse before 30 June 2018).
    • You and your spouse must be covered by the same complying health insurance policy for the same period of time.
    • You and your spouse must agree to this before you complete and lodge your tax return.

    If your spouse has no other reason to lodge a tax return, other than to claim their rebate entitlement, you can choose to claim your spouse’s rebate in your tax return. This means your spouse does not have to lodge. However, you must still satisfy the three conditions above.

    If you choose to claim your spouse’s rebate and your spouse has claimed more rebate than they were entitled to, you are agreeing to pay back their over claimed amount.

    You can choose to claim the rebate for your spouse, even if you and your spouse lodge your tax returns at separate times. If you claim the rebate for your spouse, your spouse cannot claim a rebate as well.

    If you separated from your spouse during the year, you can only claim for your share of the policy – your ex-spouse will have to claim their share, even if you paid all the premiums.

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    How to claim for your spouse

    If your spouse has agreed that you should claim their share of the private health insurance rebate (as well as your own), follow these steps to complete your tax return:

    1. Enter your private health insurance information in the private health insurance section of your tax return based on the directions in the Individual tax return instructions and write or select tax claim code C.
    2. Using your spouse’s private health insurance statement, enter your spouse's private health insurance information in the private health insurance policy details section of your tax return beneath your information from Step 1.
    3. Enter tax claim code D in your tax return next to your spouse's private health insurance details that you have provided.

    Example: Claiming the rebate for your spouse

    John and Jill are a de facto couple who live together and share a complying private health insurance policy. They are both 45 years old and have no children. John earned $140,000 as a financial consultant, while Jill spent the year undertaking volunteer work and did not earn any income.

    John and Jill decided not to receive any premium reductions on their private health insurance policy because they were unsure what their income would be for the financial year. They paid premiums monthly. Based on the income tests, they are entitled to a private health insurance rebate of:

    • 25.934% for premiums paid between 1 July 2017 and 31 March 2018
    • 25.415% for premiums paid between 1 April 2018 and 30 June 2018.

    Because Jill did not earn any income, she is not going to lodge a tax return. She agrees that John can claim her share of the private health insurance rebate in his tax return. John will need his and Jill’s private health insurance statements to complete his tax return.

    John’s private health insurance statement for 2017–18

    Health insurer ID

    Membership number

    Your premiums eligible for Australian Government rebate

    Your Australian Government rebate received

    Benefit code

    Other adult beneficiaries for the policy

    B ABC

    C 123456

    J 1,000

    K 0

    L 30

    Jill

    B ABC

    C 123456

    J 300

    K 0

    L 31

    Jill

    Jill’s private health insurance statement for 2017–18

    Health insurer ID

    Membership number

    Your premiums eligible for Australian Government rebate

    Your Australian Government rebate received

    Benefit code

    Other adult beneficiaries for the policy

    B ABC

    C 123456

    J 1,000

    K 0

    L 30

    John

    B ABC

    C 123456

    J 300

    K 0

    L 31

    John

    In his tax return, John writes or selects:

    • Tax claim code C for his private health insurance details
    • Tax claim code D for Jill’s private health insurance details.
    End of example

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    If your spouse is claiming your share

    You can allow your spouse to claim your share of private health insurance rebate in their tax return while you lodge your own tax return.

    To do this you need to provide your information in the private health insurance section of your tax return, using tax claim code E.

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    Automatic transfer of liability

    If your spouse has under claimed or over claimed the private health insurance rebate, and has not agreed to allow you to claim their rebate or pay any of their private health insurance liability through your tax return, your spouse must lodge their own tax return.

    If your spouse still does not lodge their tax return by the end of the lodgment year, any private health insurance liability owed by your spouse will be reduced to nil, and it will automatically become your liability.

    If you prepaid your private health insurance

    If your private hospital health insurance premiums were paid in a previous financial year (that is, prepaid), you cannot claim a rebate in the current financial year. For example, if your 2017–18 premiums were paid in 2016–17, you cannot claim a rebate in your 2018 tax return.

    However, you still need to enter these details in your current year’s tax return.

    This will confirm you had an appropriate level of private patient hospital cover during this time, and ensure we do not charge the Medicare levy surcharge.

    You should have received a private health insurance statement from your insurer. Your statement will have the details of your policy and show $0 values in:

    • label J (Your premiums eligible for Australian Government rebate)
    • label K (Your Australian Government rebate received).

    Use your statement and the Individual tax return instructions to guide you in completing your tax return. Enter the $0 values at the relevant labels on your tax return and use the tax claim code applicable to your situation.

    If you prepaid your insurance for 12 or more months, you may want to consider contacting your private health insurer to discuss your income and rebate tier, and nominate a different tier.

    There is no requirement for you to change the level of rebate you receive as a premium reduction. However, it will reduce the chance of you getting a liability next tax time.

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    Claiming for a dependent child only policy

    This section only applies if you have dependent children who are covered by their own private health insurance policy. Dependent children are not eligible to claim a private health insurance rebate. However, if you have paid for their policy, you may be eligible to claim it on their behalf.

    If the parents of the child are:

    • together, then one of the parents may claim the rebate – this applies regardless of which parent paid for the policy
    • no longer together, then the payer of the policy must claim the rebate – the payer of the policy does not need to be a parent of the child.

    Follow these steps to complete your tax return:

    1. Using the private health insurance statement that relates to the dependent child’s private health insurance policy, complete your tax return using the Individual tax return instructions as a guide.
    2. Choose the appropriate tax claim code from the table below and include it in your tax return.
    Table 20: Tax claim codes – dependent child only policy

    Your circumstances

    Tax claim code for your tax return

    Your dependent child (children) is the only person on the policy and the parent claiming the rebate (or payer of the policy premiums) has a spouse.

    C

    Your dependent child (children) is the only person on the policy and the parent claiming the rebate (or payer of the policy premiums) does not have a spouse.

    B

    If you are a dependent child, you are not eligible to claim a private health insurance rebate. However, the Medicare levy surcharge can still apply to you if your income is high enough.

    Note: If you have an appropriate level of private patient hospital cover, you can avoid paying this surcharge by entering the details from the statement for your policy in your tax return and using tax claim code F.

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    If you are a dependent child

    This section applies if you are covered as a dependent child on a private health insurance policy.

    You can be covered on a private health insurance policy up to 25 years old, subject to the rules of your insurer (and you meeting other conditions). If you are unsure whether you are covered as a dependent child or an adult, contact your health insurer.

    Dependent children do not get their own statement, because they cannot claim the rebate and are not subject to the income test. As a dependent child, you may need to complete the private health insurance policy detail section of your tax return so we can verify your insurance coverage. This will ensure you are not charged the Medicare levy surcharge (if your income is above the threshold).

    Before completing the private health insurance section of your tax return, you will need to obtain a statement from one of the adults covered on the policy.

    Using this statement, complete your tax return by inserting tax claim code F as per the Individual tax return instructions.

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    Overseas visitors

    If you are an overseas visitor, the way to complete the private health insurance policy details on your tax return depends on your circumstances, such as:

    • if you have an overseas health insurer
    • if you have a complying health insurance policy
    • if you are not eligible for Medicare
    • if you have overseas student or overseas visitor health cover.

    If you do have a health insurance policy, see the table below. Depending on the type of policy you have, it shows if:

    • you are eligible for Medicare
    • you are eligible for the private health insurance rebate
    • you need to complete the private health insurance details on your tax return.
    Table 21: Guide for overseas visitors by health insurance policy type

     

    Eligible for Medicare

    Eligible for private health insurance rebate

    Complete private health insurance details

    Policy from overseas health insurer

    Not applicable

    No

    No

    Complying health insurance policy from Australian-registered health insurer

    Yes

    Yes

    Yes

    No

    No

    No

    OSHC or OVHC from Australian-registered health insurer

    Not applicable

    No

    No

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    If you have an overseas health insurer

    If your private health insurance provider is an overseas provider that is not registered in Australia, you will not be eligible for any rebate on your policy, and you may need to pay the Medicare levy surcharge if you don't meet the conditions for a Medicare levy exemption.

    In this case, when completing your tax return, you should:

    • answer No at label E item M2 Medicare levy surcharge
    • work out the number of days you do not have to pay the Medicare levy surcharge (if you qualify for a Medicare levy exemption you will also be exempt from paying the Medicare levy surcharge) and complete label A item M2 Medicare levy surcharge as per the Individual tax return instructions
    • not complete the private health insurance policy details section.

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    If you have a complying health insurance policy

    You will receive a private health insurance statement from your insurance provider if:

    • you have an Australian-registered complying health insurance policy
    • you are eligible for Medicare
    • you are a private health insurance incentive beneficiary (PHIIB).

    When completing your tax return, if you and all of your dependents were covered under a complying health insurance policy for the full year with the appropriate level of private patient hospital cover, you should:

    • answer Yes at label E item M2 Medicare levy surcharge (see the Individual tax return instructions when completing the other parts of M2)
    • complete the private health insurance policy details section.

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    If you are not eligible for Medicare

    If you are an overseas visitor who is not eligible for Medicare, you are not entitled to any private health insurance rebate.

    However, you can still purchase a complying health insurance policy with an Australian-registered health insurer. You will receive a private health insurance statement. Your statement will show the amount of premiums paid (at label J), while the rebate received at label K will be zero ($0).

    If the complying health insurance policy provides you and all of your dependants with the appropriate level of private patient hospital cover, you will be eligible to claim an exemption from the Medicare levy surcharge.

    When completing your tax return, you must:

    • answer No at label E item M2 Medicare levy surcharge
    • not complete the private health insurance policy details section.

    If you and all of your dependants, including your spouse, were:

    • covered under the appropriate level of private patient hospital cover for the full year, write 365 at label ‘A – Number of days you do not have to pay the surcharge’
    • not covered under the private patient hospital cover for the full year, answer No at label E and follow the Individual tax return instructions to complete the rest of M2.

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    Overseas student or overseas visitors health cover

    If you are an overseas visitor, you can purchase Overseas student health cover (OSHC) or Overseas visitors health cover (OVHC) from an Australian-registered health insurer. These are not complying health insurance policies, and you will not be eligible for the private health insurance rebate.

    When completing your tax return as an overseas visitor with OSHC or OVHS:

    • answer No at label E item M2 Medicare levy surcharge
    • work out the number of days you are eligible for exemption from the Medicare levy surcharge and complete label A item M2 Medicare levy surcharge as per the Individual tax return instructions
    • do not complete the private health insurance policy details section.

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    If you don't usually have to lodge

    You will not need to lodge a tax return if all of the following apply:

    • your income for surcharge purposes is less than the single or family base tier.
    • you claimed your entire private health insurance rebate from your health insurer as a premium reduction.
    • you have no other reason for lodging a return.

    You will need to lodge a tax return if you have not claimed any, or all, of your rebate, or you have over claimed the rebate from your health insurer as a premium reduction. We will use your tax return to work out your private health insurance tax offset or liability, if any, for the relevant financial year.

    However, you can allow your spouse to claim your share of the rebate and you will not have to lodge.

    Allowing your spouse to claim your rebate

    If your spouse is lodging a tax return, you can allow them to claim your share of the rebate in their tax return. By making this choice, you and your spouse are agreeing that your spouse will:

    • receive the tax offset for any under claimed rebate
    • pay any liability owed if the rebate has been over claimed.

    This means that if you have no other reason for lodging, you will not have to lodge a tax return just to claim the rebate or pay any private health insurance liability.

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    Including your spouse’s details in your return

    If you have a spouse on 30 June, the private health insurance rebate is income tested on the combined income of you and your spouse. You need to include your spouse’s details, including their income, in the spouse details section of your tax return. If you don’t know your spouse’s income, provide the best estimate possible.

    When we find an error or omission, we take into account your relevant circumstances (including compliance history) when deciding what action to take – particularly for any penalties or possible prosecution action.

    Relevant circumstances include the reasons for the discrepancy or failure, and how well you have complied with your tax obligations in the past. We also consider your attitude towards complying with the tax laws. If you have acted reasonably and in good faith, we will not charge you interest.

    Last modified: 29 Jun 2018QC 49967