• Working 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 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 toolThis link opens in a new window and find the corresponding amount of Medicare levy adjustment in the appropriate column.

    Example

    The employee has weekly earnings of $454.70 and is claiming four dependent children on the Medicare levy variation declaration. Input $454 into the Medicare levy adjustment look-up tool and refer to the corresponding Medicare levy adjustment of $6.00 from the ‘4 children’ column.

    End of example

    Employee 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 weekly earnings of the payee, refer to:

    Weekly earnings less than $964

    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 toolThis link opens in a new window and find the corresponding amount of Medicare levy adjustment from the ‘5 children’ column.

    Example

    The employee has weekly earnings of $410.65 and is claiming six dependent children. Input $410 into the Medicare levy adjustment look-up tool and refer to the corresponding Medicare levy adjustment of $2.00 from the ‘5 children’ column.

    End of example

    Weekly earnings of $964 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 payee has weekly earnings of $973.48 and is claiming seven dependent children. Take 2% of $973.99 (weekly earnings of $973, rounded down to the nearest dollar, plus 99 cents), this equals $19.48.

    The Medicare levy adjustment is $19, rounded to the nearest dollar.

    End of example

    Weekly earnings of $964 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 2% of the relevant column B amount. Round the result to the nearest cent.
    2. 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.
    3. Subtract the result of step 2 from step 1.
    4. Round the result to the nearest dollar.

    Example

    The employee has weekly earnings of $1,259.32 and is claiming seven dependent children.

    1. 2% × $1,259.32 (column B amount for seven children)
      = $21.72
    2. 8% × ($1,259.99 – $1,085.75)
      = 8% × $174.24
      = $13.94
    3. $21.72 – $13.94
      = $7.78
    4. $8.00 ($7.78 rounded to the nearest dollar).

    The Medicare levy adjustment is $8.00.

    End of example

    Using 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, to refer to Statement of formulas for calculating amounts to be withheld (NAT 1004).

    Last modified: 18 Feb 2015QC 39413