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 weekly earnings down to the nearest dollar amount. Input the weekly earnings into the Medicare levy adjustment look-up tool (XLSX 50KB)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 weekly earnings of the payee – refer to:
Weekly earnings less than $1,041
Use the ‘5 children’ column. Round the weekly earnings down to the nearest dollar. Input the weekly earnings into the Medicare levy adjustment look-up tool (XLSX 50KB)This link will download a file and find the corresponding amount of Medicare levy adjustment in the ‘5 children’ column.
Weekly earnings of $1,041 or more but less than the column B amount that corresponds to the number of dependent children claimed
Round the weekly earnings down to the nearest dollar and add 99 cents. Take 2% of that amount and round to the nearest dollar.
Example
The employee has weekly earnings of $1,050.48 and is claiming seven dependent children. Take 2% of $1,050.99 (weekly earnings of $1,050, rounded down to the nearest dollar, plus 99 cents), this equals $21.02.
The Medicare levy adjustment is $21, rounded to the nearest dollar.
End of exampleWeekly earnings of $1,041 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 weekly earnings (round down to the nearest dollar plus 99 cents) 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 weekly earnings of $1,259.32 and is claiming seven dependent children.
- 2% × $1,171.75 (column B amount for seven children)
= $23.44
- 8% × ($1,259.99 − $1,171.75)
= 8% × $88.24
= $7.06
- $23.44 − $7.06
= $16.38
- $16.00 ($16.38 rounded to the nearest dollar).
The Medicare levy adjustment is $16.00.
End of exampleUsing a formula
The Medicare levy adjustments 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: 14 Jun 2019QC 55442