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Edited version of private ruling

Authorisation Number: 1011558025196

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Ruling

Subject: Medicare Levy Surcharge

Question

Are you liable for Medicare levy surcharge?

Answer

No.

This ruling applies for the following period:

Year ended 30 June 2010

The scheme commences on:

1 July 2009

Relevant facts and circumstances

You are employed as a serving member of the Australian Defence Force for the entire 2009-10 income tax year.

You do not have a spouse, and you do not have any dependant children.

You have a combined taxable income and reportable fringe benefits of more than $73,000.00 for the 2009-10 income tax year.

You do not have private health cover.

You have Defence Force Medical cover as a serving member of the Defence Force, which entitles you to full free medical treatment for all conditions under Defence Force arrangements.

Relevant legislative provisions

Income Tax Assessment Act 1936 Section 251S,

Income Tax Assessment Act 1936 Section 251U,

Medicare Levy Act 1986 Section 3AA and

Medicare Levy Act 1986 Section 8B.

Reasons for decision

Summary

You are a 'prescribed person' for the purposes of the Medicare levy surcharge. Therefore you are not liable for the Medicare levy surcharge on your taxable income and reportable fringe benefits in the 2009-10 income tax year.

Detailed reasoning

Paragraph 251S(1)(a) of the Income Tax Assessment Act 1936 (ITAA 1936) provides that a Medicare levy is levied at the rate applicable in the Medicare Levy Act 1986 (MLA 1986) from the 1983-84 income tax year onwards on the taxable income of a person who at any time during the year was a resident.

Section 8B of the MLA 1986 provides 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 period:

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

Singles surcharge threshold

Section 3AA of the MLA 1986 provides that the singles surcharge threshold for a person is $73,000.00 in the 2009-10 income tax year.

Because your taxable income and reportable fringe benefits exceeded the singles surcharge threshold of $73,000.00, you may be liable for the Medicare levy surcharge, provided all of the conditions in section 8B of the MLA 1986 are satisfied.

Prescribed persons

A 'prescribed person' is defined in paragraph 251U(1)(a) of the ITAA 1936 to include a person who was a member of the Defence Force and was entitled to free medical treatment.

You are a serving member of the Australian Defence Force. You are entitled to full free medical treatment for all conditions under Defence force arrangements. Therefore you are considered to be a 'prescribed person' as defined in paragraph 251U(1)(a) of the ITAA 1936 for the purposes of determining the Medicare levy surcharge.

You do not have any spouse or dependants. Your Defence Force Medical cover is the same as being covered by an insurance policy that provides private patient hospital cover. In addition, you are considered to be a 'prescribed person' for the purposes of the Medicare levy surcharge. Therefore you are not liable for the Medicare levy surcharge on your taxable income and reportable fringe benefits in the 2009-10 income tax year, under section 8B of the MLA 1986.

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