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House of Representatives

Tax Laws Amendment (Medicare Levy Surcharge Thresholds) Bill (No. 2) 2008

Explanatory Memorandum

Circulated By the Authority of the Treasurer, the Hon Wayne Swan Mp

General outline and financial impact

Increasing the Medicare levy surcharge thresholds

This Bill amends:

the Medicare Levy Act 1986 and the A New Tax System (Medicare Levy Surcharge-Fringe Benefits) Act 1999 to:

increase the Medicare levy surcharge threshold for individuals from $50,000 to $75,000, and going forward this threshold will be annually indexed to wages and increase in $1,000 increments (rounding down);
increase the Medicare levy surcharge threshold for families from $100,000 to $150,000, and going forward will be double the single threshold; and
introduce transitional arrangements so that individuals who obtain appropriate private health cover before 1 January 2009 will avoid the Medicare levy surcharge for the period 1 July 2008 through to 31 December 2008.

Date of effect: The increased Medicare levy surcharge thresholds apply from the 2008-09 year of income and later years of income.

Proposal announced: This measure was announced on 23 September 2008.

Financial impact: This measure will have these revenue implications:

2007-08 2008-09 2009-10 2010-11 2011-12
- $129m $79m $68m $78m

This measure will have these net fiscal implications (including the effects of decreased Government expenditure on the private health insurance rebate). The overall financial impact over the forward estimates is a net saving of approximately $354 million.

Compliance cost impact: Negligible.

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