ATO Interpretative Decision

ATO ID 2002/48 (Withdrawn)

Income Tax

• This ATO ID is withdrawn. Guidance relating to the issue addressed in this ATO ID can be found in Family and dependants for Medicare levy surcharge purposes (QC 27044).
  This document incorporates revisions made since original publication. View its history and amending notices, if applicable.

Issue

Is a taxpayer, who pays child support for children who are not residing with the taxpayer and does not have an insurance policy providing private patient hospital cover, entitled to the family surcharge threshold under section 8C of the Medicare Levy Act 1986 (MLA 1986) in calculating any increase in the Medicare levy payable?

Decision

Yes, the taxpayer is entitled to the family surcharge threshold under section 8C of the MLA 1986 when calculating any increase in the Medicare levy payable as the taxpayer has 'dependants' as defined in subsection 251R(3) of the Income Tax Assessment Act 1936 (ITAA 1936).

Facts

The taxpayer is not married and is not a 'prescribed person'.

The taxpayer pays child support in respect of children under 16 years of age, or 21 years of age for the 2005-06 and later years of income.

The children do not reside with the taxpayer.

The taxpayer is not covered by an insurance policy that provides private patient hospital cover.

Reasons for Decision

An unmarried person that has one or more dependants is liable to pay an increase in the Medicare levy of 1 per cent on their taxable income and reportable fringe benefits under section 8C of the MLA 1986 if they are not a 'prescribed person' as defined in section 251U of the ITAA 1936, they do not have an insurance policy providing 'private patient hospital cover' and their taxable income exceeds the amount calculated in accordance with the formula for the 'family surcharge threshold' contained in section 3A of the MLA 1986.

Subsection 251R(3) of the ITAA 1936 provides that a taxpayer will be taken to have a dependant if, during any part of the year of income:

•

the person was a resident of Australia;

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the person was either a:

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spouse of the taxpayer;

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a child of the taxpayer less than 16 years of age, or 21 years of age for the 2005-06 and later years of income; or

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a child of the taxpayer not less than 16 years of age, or 21 years of age for the 2005-06 and later years of income, but less than 25 years of age and receiving full-time education at a school, college or university; and

•

the taxpayer contributed to the maintenance of the person

The taxpayer is not married, is not covered by private patient hospital cover and is not a prescribed person. The taxpayer contributed to the maintenance of the children by making child support payments and consequently has 'dependants' as defined in subsection 251R(3) of the ITAA 1936. The taxpayer is therefore entitled to use the 'family surcharge threshold' in calculating any increase in the Medicare levy payable under section 8C of the MLA 1986.

Legislative References:
Medicare Levy Act 1986
   section 3A
   section 8C

Keywords
Dependent children
Dependants
Maintenance payments
Medicare levy surcharge

Business Line:  Small Business/Individual Taxpayers

Date of publication:  24 January 2002

ISSN: 1445-2782