When you pay the Medicare levy surcharge
You may have to pay the Medicare levy surcharge (MLS) if:
- you, your spouse and your dependent children do not have an appropriate level of private patient hospital cover
- you earn above a certain income.
The MLS is an amount you pay on top of the Medicare levy.
If you take out an appropriate level of private patient hospital cover for yourself, your spouse and all your dependants, you will not pay the MLS.
How much Medicare levy surcharge you will pay
The (MLS) rate of 1%, 1.25% or 1.5% is levied on:
- your taxable income
- total reportable fringe benefits, and
- any amount on which family trust distribution tax has been paid.
We use a special definition of income (called income for MLS purposes) to work out if you have to pay the MLS and the rate you will pay. This income is different from your taxable income.
You will not pay the MLS if your income is less than the base income threshold, which is:
- $93,000 for singles
- $186,000 (plus $1,500 for each dependent child after the first one) for families.
You can use the Income tax estimator to work out your MLS.
Medicare levy surcharge if you had a spouse
If you had a spouse for the full year, you do not have to pay the MLS if:
- your family income exceeds the $186,000 (plus $1,500 for each dependent child after the first one), but
- your own income for MLS purposes was $26,000 or less.
If you had a new spouse, or you separated from your spouse, during the year:
- you may be liable for MLS for the number of days you were single – if your income for MLS purposes was more than the single surcharge threshold of $93,000
- you may be liable for MLS for the number of days you had a spouse or dependent children – if your own income for MLS purposes was more than the family surcharge threshold of $186,000 (plus $1,500 for each dependent child after the first one).
We will work out if you need to pay the MLS based on the information you provide in your tax return. We will include MLS with your Medicare levy. It will show as one amount on your notice of assessment, called Medicare levy and surcharge.
Medicare levy surcharge in your tax return
We work out if you need to pay the MLS and the amount you need to pay when we process your tax return each year. The MLS is not covered in tax withheld by your employer.
If you need to pay the MLS, this amount will be added to your tax liability and may lead to a reduced refund or tax bill.
Change in circumstances during the year
If circumstances for yourself, your spouse or your dependent children change at any time during the year, you may become liable to pay the MLS.
Changes in circumstances may relate to your:
- income
- spouse
- dependants
- private health insurance.
If you travel overseas and cancel your private patient hospital cover during that time, you may be liable to pay the Medicare levy surcharge (MLS).