ATO Interpretative Decision

ATO ID 2002/219 (Withdrawn)

Income Tax

Medicare Levy Surcharge - taxpayer covered under parent's family membership
FOI status: may be released

This ATO ID is a simple restatement of the law and does not contain an interpretative decision.

This document incorporates revisions made since original publication. View its history and amending notices, if applicable.

CAUTION: This is an edited and summarised record of a Tax Office decision. This record is not published as a form of advice. It is being made available for your inspection to meet FOI requirements, because it may be used by an officer in making another decision.

This ATOID provides you with the following level of protection:

If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.

Issue

Is a taxpayer liable for the Medicare levy surcharge under section 8B of the Medicare Levy Act 1986 (MLA 1986) when they are covered by private patient hospital cover under their parent's family membership?

Decision

No. A taxpayer is not liable for the Medicare levy surcharge under section 8B of the MLA 1986 as they are considered to be covered by full private patient hospital cover.

Facts

The taxpayer had a taxable income exceeding $50 000 in the income year. The taxpayer did not receive reportable fringe benefits.

The taxpayer is under 21 years of age and single. The taxpayer's parent's family health insurance covers persons up to 21 years of age who are living at home.

The taxpayer is insured for full private patient hospital cover under the family policy.

The taxpayer is not a 'prescribed person' as defined in section 251U of the Income Tax Assessment Act 1936 (ITAA 1936).

Reasons for Decision

Paragraph 251S(1)(a) of the ITAA 1936 provides that a Medicare levy is levied at the rate applicable in the MLA 1986 from the 1984 year of income onwards on the taxable income of a person who at any time during the year of income was a resident.

Section 8B of the MLA 1986 provides that the amount of Medicare levy payable by a taxpayer is increased by 1% of their taxable income and reportable fringe benefits where, for the whole of the year, they:

•: Exceed $50 000 in taxable income and reportable fringe benefits
•: Are not a married person
•: Do not have dependants
•: Do not have private patient hospital cover, and
•: Are not a prescribed person as defined in section 251U of the ITAA 1936.

This increase in the amount of Medicare levy payable is commonly known as the Medicare levy surcharge.

Paragraph 8B(1)(c) of the MLA 1986 simply requires that a person be covered by private patient hospital cover in order to avoid the Medicare levy surcharge. The provision does not require the taxpayer to personally pay the premiums in respect of private patient hospital cover. The fact that the taxpayer's parents paid the premiums is not relevant to the determination of whether the taxpayer has private patient hospital cover.

The health insurance policy taken out by the taxpayer's parents provides the taxpayer with private patient hospital cover. Accordingly, the taxpayer is not liable for the Medicare levy surcharge under section 8B of the MLA 1986.

Note: the Medicare levy surcharge on a taxpayer's taxable income applies from the 1998 income year onwards and on reportable fringe benefits from the 2000 and later years of income.

Date of decision: 7 February 2002

Legislative References:
Income Tax Assessment Act 1936
paragraph 251S(1)(a)
section 251U

Medicare Levy Act 1986
section 8B
paragraph 8B(1)(c)

Keywords
Medicare levy surcharge

Business Line: Small Business/Individual Taxpayers

Date of publication: 28 February 2002

ISSN: 1445-2782

history

	Date:	Version:
	7 February 2002	Original statement
You are here	30 April 2010	Archived

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