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  • Check your client's family circumstances

    When completing your client’s tax return, you need to know their personal circumstances for that financial year. Accurately reporting their family’s details is critical to correctly calculate the Medicare levy, Medicare levy surcharge (MLS) and private health insurance rebate. Getting it right will help avoid an audit or delays in processing.

    If your client’s income is greater than the MLS threshold and they didn’t have adequate private health cover for the full year, you must only report the number of days that they had adequate private health insurance coverage. This allows us to work out the MLS amount they need to pay.

    When completing your client’s tax return, make sure you confirm:

    • Their spouse’s income for MLS purposes, if applicable.
    • The status of any dependants – this must match the private hospital insurance policy. For example, a couples or a singles policy may not appropriately cover dependants.
    • Private patient hospital cover is held for the whole family, for the full period (or enter the number of days reported at M2A).

    Remember, if your client isn’t entitled to Medicare benefits and is claiming the Medicare levy exemption, they will need a Medicare Entitlement Statement (MES) from Services AustraliaExternal Link before you lodge their tax return. Both the spouse and any dependants need to either be in a Medicare levy exemption category or covered by appropriate private health insurance in order for the client to be exempt from MLS.

    Last modified: 04 Aug 2022QC 70141