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  • Medicare levy surcharge

    The Medicare levy surcharge (MLS) is levied on Australian taxpayers who:

    • don't have an appropriate level of private patient hospital cover for themselves, their spouse and dependent children, and
    • earn above a certain income.

    The MLS is designed to encourage these people to take out private patient hospital cover and use the private hospital system. This will reduce demand on the public Medicare system.

    We use a special definition of income (called income for MLS purposes) to determine if you have to pay the MLS and the rate you will pay. This income is different from your taxable income.

    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.

    If you have to pay the MLS, it is in addition to the Medicare levy.

    The base income threshold (under which you are not liable to pay the MLS) is:

    • $90,000 for singles
    • $180,000 for families.

    However, if you had a spouse for the full year, you do not have to pay the MLS if:

    • your family income exceeds the threshold, but
    • your own income for MLS purposes was $22,801 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 own income for MLS purposes was more than the single surcharge threshold of $90,000
    • 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 $180,000 (plus $1,500 for each dependent child after the first one).

    If you are liable to pay the MLS, we will work it out based on the information you provide in your tax return. We will include it with your Medicare levy. It will show as one amount on your notice of assessment, called Medicare levy and surcharge.

    See also:

    • Income tax estimator – calculate the Medicare levy surcharge
    • Income thresholds and rates for the Medicare levy surcharge – find the MLS thresholds and rates

    Income for Medicare levy surcharge purposes

    Income for Medicare levy surcharge (MLS) purposes is used to determine whether you are liable to pay the MLS and the rate you will pay.

    If you have a spouse, your combined income for MLS purposes will be used.

    Your income for MLS purposes is the sum of the following items for you (and your spouse, if you have one):

    If you had exempt foreign employment income, and your taxable income is $1 or more, add your exempt foreign employment income to your taxable income.

    If you (or your spouse) are aged from your (or their) preservation age to under 60 years old and received a super lump sum, reduce income for MLS purposes by any taxed element of the lump sum, other than a death benefit, that does not exceed your (or their) low rate cap.

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    Last modified: 27 Oct 2020QC 27040