A trustee only needs to complete this item if all of the following conditions apply:
- The trustee is liable to be assessed on a share of the net income of the trust because a beneficiary is presently entitled to a share of the income of the trust but under a legal disability.
- That amount of the net income of the trust upon which the trustee is liable to be assessed in respect of a particular beneficiary is more than the relevant threshold amount for the Medicare levy as set out in part A of question M1 in Individual tax return instructions 2012; either the relevant threshold amount for all other taxpayers or, if eligible, the relevant threshold for the pensioner or person entitled to the senior Australians tax offset.
- That beneficiary qualifies for an exemption or reduction in the Medicare levy under one of the categories set out in question M1 of Individual tax return instructions 2012.
If there is more than one such beneficiary, provide a statement on a separate sheet of paper setting out the information required at this item for each additional beneficiary. Attach the statement to the tax return and print X in the Yes box at Have you attached any 'other attachments'? at the top of page 1 of the tax return.
Spouse's 2011–12 taxable income
Show at A the taxable income of the beneficiary's spouse for the 2011-12 income year. If the beneficiary had no spouse or had a spouse who had no taxable income, write zero (0) at A.
Number of dependent children and students
Show at B the number of the beneficiary's dependent children and students, if any.
C and D
For details of the various Medicare levy exemption categories, see Individual tax return instructions 2012.
Full 1.5% levy exemption – number of days
Show at C the number of days in the 2011–12 income year for which the beneficiary was entitled to the full Medicare levy exemption. If you have completed C and the beneficiary has been issued with a Medicare exemption certificate from the Medicare Levy Exemption Certification Unit of Medicare Australia showing that the beneficiary is not entitled to any Medicare benefits, print C in the CODE box.
Half 1.5% levy exemption - number of days
Show at D the number of days during the 2011–12 income year for which the beneficiary was entitled to a half Medicare levy exemption.
Medicare levy on net income assessed to the trustee under sections 99 or 99A of the ITAA 36
If a trustee is liable to be assessed on that part of the net income of a trust (other than a trust of a deceased person) under either sections 99 or 99A of the ITAA 1936 the trustee may need to pay the Medicare levy.
If a trustee is assessed on part or all of the net income of a trust under either sections 99 or 99A of the ITAA 36 and is liable to pay tax on all of the income so assessed at the top marginal tax rate, the trustee must pay the Medicare levy at 1.5% of net income.
In other situations, if the net income assessed to the trustee is:
- $416 or less, no Medicare levy is payable
- $417 to $490, the Medicare levy is 10% of the excess over $416
- more than $490, the Medicare levy is 1.5% of the net income assessed to the trustee.
Medicare levy surcharge
If the beneficiary's share of the trust net income to which a trustee is assessed under section 98 exceeds either $80,000 (if single) or $160,000 for the family surcharge threshold (plus $1500 for each dependent child after the first), see question M2 in Individual tax return instructions 2012, the trustee may be liable for the Medicare levy surcharge (MLS).
Provide a statement on a separate sheet of paper showing the:
- trust's name
- trust's TFN
- beneficiary's name
- beneficiary's TFN
- beneficiary's income for (Medicare levy) surcharge purposes
- number of days not liable for MLS
- full name of beneficiary's spouse, if applicable
- spouse's taxable income, if applicable
- spouse's income for (Medicare levy) surcharge purposes, if applicable
- number of dependent children, if applicable
- health insurer identification (ID) code, if applicable
- membership number, if applicable
- type of cover, if applicable - General (also known as 'extras'), Hospital or Combined hospital and ancillary cover.
Sign the statement, attach it to the tax return and print X in the Yes box at Have you attached any 'other attachments'? at the top of page 1 of the tax return.
The definition of dependant for the purposes of MLS differs from the definition of dependant for other tax purposes (such as dependent spouse tax offset).
The beneficiary's and their spouse's income for (Medicare levy) purposes must be calculated ignoring the exemption under section 271-105 of Schedule 2F to the ITAA 1936 for distributions on which family trust distribution tax (FTDT) has been paid. For more information about the circumstances in which FTDT is payable, see Family trust distribution tax.
For more information about income for surcharge purposes and the components used to calculate it, see Income tests.