Working out the Medicare levy adjustment
How you work out the Medicare levy adjustment varies depending on the number of dependent children your employee is claiming, see either:
Employee claiming spouse and/or one to five dependent children
Round the fortnightly earnings down to the nearest dollar amount. Input the fortnightly earnings into the Medicare levy adjustment lookup tool (XLSX 34KB)This link will download a file and find the corresponding amount of Medicare levy adjustment in the appropriate column.
Employee with more than five dependent children
How you work out the Medicare levy adjustment for an employee with more than five dependent children varies depending on the fortnightly earnings of your employee. Refer to:
Fortnightly earnings less than $2,160
Use the ‘5 children’ column. Round the fortnightly earnings down to the next dollar amount. Input the fortnightly earnings into the Medicare levy adjustment lookup tool (XLSX 34KB)This link will download a file and refer to the corresponding amount of Medicare levy adjustment from the ‘5 children’ column.
Fortnightly earnings of $2,160 or more but less than the column B amount that corresponds to the number of dependent children claimed
Round the fortnightly earnings down to the next dollar amount. Take 2% of that amount and round to the nearest dollar.
Example
The employee has fortnightly earnings of $2,235.50 and is claiming seven dependent children. Take 2% of $2,235 (the next lower dollar amount), this equals $44.70.
The Medicare levy adjustment is $45, rounded to the nearest dollar.
End of exampleFortnightly earnings of $2,160 or more and greater than the column B amount but less than the column A amount that corresponds to the number of dependent children claimed
Complete steps 1–4 below:
- Take 2% of the relevant column B amount. Round the result to the nearest cent.
- Take 8% of the difference between the fortnightly earnings (round down to the next dollar amount) and the column B amount. Round the result to the nearest cent.
- Subtract the result of step 2 from step 1.
- Round the result to the nearest dollar.
Example
The employee has fortnightly earnings of $2,624.00 and is claiming eight dependent children.
- 2% × $2,566.84 (column B amount for eight children)
= $51.34
- 8% × ($2,624.00 − $2,566.84)
= 8.0% × $57.16
= $4.57
- $51.34 − $4.57
= $46.77
- $47.00 ($46.77 rounded to the nearest dollar).
The Medicare levy adjustment is $47.
End of exampleUsing a formula
The withholding amounts shown in this table can be expressed in a mathematical form.
If you have developed your own payroll software package, refer to Statement of formulas for calculating amounts to be withheld.
Last modified: 13 Oct 2020QC 63815