• How to work out the Medicare levy adjustment

    Attention

    Warning:

    This information may not apply to the current year. Check the content carefully to ensure it is applicable to your circumstances.

    End of attention

    How you work out the Medicare levy adjustment varies depending on the number of dependent children your payee is claiming, see either:

    Payee claiming spouse and/or one to five dependent children

    Payee with more than five dependent children

    Payee claiming spouse and/or one to five dependent children

    Input the monthly earnings into the Medicare levy adjustment look-up tool and find the corresponding amount of Medicare levy adjustment in the appropriate column.

    Example

    The payee has monthly earnings of $1,897.65 and is claiming four dependent children on the Medicare levy variation declaration. Input $1,897.65 into the Medicare levy adjustment look-up tool and find the corresponding Medicare levy adjustment of $17.00 from the ‘4 children’ column.

    End of example

    Payee with more than five dependent children

    How you work out the Medicare levy adjustment for a payee with more than five dependent children varies depending on the monthly earnings of the payee, refer to:

    Monthly earnings less than $3,982

    Monthly earnings of $3,982 or more but less than the column B amount that corresponds to the number of dependent children claimed

    Monthly earnings of $3982 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

    Monthly earnings less than $3982

    Use the ‘5 children’ column. Input the monthly earnings into the Medicare levy adjustment look-up tool and find the corresponding amount of Medicare levy adjustment from the ‘5 children’ column.

    Example

    The payee has monthly earnings of $1,779.48 and is claiming six dependent children. Input $1,779.48 into the Medicare levy adjustment look-up tool and find the corresponding Medicare levy adjustment of $9.00 from the ‘5 children’ column.

    End of example

    Monthly earnings of $3,982 or more but less than the column B amount that corresponds to the number of dependent children claimed

    Round the monthly earnings down to the next dollar amount. Take 1.5% of that amount and round to the nearest dollar.

    Example

    The payee has monthly earnings of $4,062.60 and is claiming seven dependent children. Take 1.5% of $4,062.00 (the next lower dollar amount), this equals $60.93.

    The Medicare levy adjustment is $61, rounded to the nearest dollar.

    End of example

    Monthly earnings of $3,982 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:

    1. Take 1.5% of the relevant column B amount. Round the result to the nearest cent.
    2. Take 8.5% of the difference between the monthly earnings (round down to the next dollar) and the column B amount. Round the result to the nearest cent.
    3. Subtract the result of step 2 from step 1.
    4. Round the result to the nearest dollar.

    Example

    The payee has monthly earnings of $5,000.17 and is claiming eight dependent children.

    1. 1.5% × $4,733.25 (column B amount for eight children)
      = $71.00
    2. 8.5% × ($5,000 – $4,733.25)
      = 8.5% × $266.75
      = $22.67
    3. $71.00 – $22.67
      = $48.33
    4. $48.00 ($48.33 rounded to the nearest dollar).

    The Medicare levy adjustment is $48.

    End of example
    Last modified: 14 Jun 2013QC 26015