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  • Medicare levy surcharge

    The Medicare levy surcharge (MLS) is levied on Australian taxpayers who do not have an appropriate level of private patient hospital cover and earn above a certain income.

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

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

    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. If you have to pay the MLS, it is in addition to the Medicare Levy.

    The base income threshold (under which you are not liable to pay the MLS) is $90,000 for singles and $180,000 for families. However, you do not have to pay the MLS if your family income exceeds the threshold but your own income for MLS purposes was $22,801 or less.

    If you are liable for the MLS, we will work it out based on the information you provide in your tax return. We will include it with your Medicare levy and it will show as one amount on your notice of assessment called Medicare levy and surcharge.

    If you want to calculate your Medicare levy surcharge, use the Income tax estimator. You can find the MLS thresholds and rates at Medicare Levy Surcharge income thresholds and rates.

    Income for Medicare levy surcharge purposes

    Income for Medicare levy surcharge (MLS) purposes is used to determine whether you are liable to pay the MLS and the rate of the MLS that you will have to pay.

    If you have a spouse, your combined income for MLS purposes will be used.

    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, and your taxable income is $1 or more, add your exempt foreign employment income to your taxable income.

    If you (or your spouse) are aged from your (or their) preservation age to under 60 years old and received a super lump sum, reduce income for MLS purposes by any taxed element of the lump sum, other than a death benefit, that does not exceed your (or their) low rate cap.

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    Last modified: 01 Jul 2020QC 27040