Explanatory Memorandum(Circulated by authority of the Treasurer, the Hon. Phillip Lynch, M.P.)
The chief purpose of this memorandum is to explain legislation that will impose a health insurance levy on the taxable income of Australian residents. Choice is provided by provisions under which the levy will not apply to people who pay a premium to Medibank, or who have appropriate insurance cover with a registered health benefits organization.
A subsidiary purpose of the legislation is to withdraw the concessional rebate now available for contributions to a hospital or medical benefits fund.
The first Bill - the Health Insurance Levy Assessment Bill 1976 - will amend the Income Tax Assessment Act to provide for the payment, in appropriate circumstances, of the health insurance levy and for its collection in conjunction with income tax. The Bill provides exemptions from the levy for low income earners. It also grants exemptions to taxpayers who, in respect of themselves and their dependants, if any, pay an appropriate premium to Medibank or have appropriate insurance cover with a registered health benefits organization. Relief is also provided for repatriation beneficiaries and defence force personnel.
The second Bill - the Health Insurance Levy Bill 1976 - declares the basic rate of levy. As the revised arrangements are to apply from 1 October 1976, the basic rate to be applied to 1976-77 taxable income will be 1.875 per cent, that is, three-fourths of the proposed full-year rate of 2.5 per cent.
The third Bill - the Income Tax (International Agreements) Amendment Bill (No. 2) 1976 - contains provisions to ensure that, under double taxation relief arrangements, foreign tax cannot be credited against levy so as to reduce the amount of levy payable.