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Edited version of private ruling
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Ruling
Subject: Medicare Levy Surcharge
Question
Are you liable to pay the Medicare Levy Surcharge for the period you did not hold a private health insurance policy?
Answer
Yes.
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 an Australian resident for tax purposes.
You were overseas for a small period during the 2009/10 income year.
During this time, you suspended your private health insurance.
You held a private health insurance policy for the remainder of the year.
Relevant legislative provisions
Medicare Levy Act 1983 Section 8B.
Reasons for decision
The Medicare Levy Surcharge (MLS) is calculated as 1% of the individual's taxable income. The MLS is additional to the Medicare Levy.
The MLS applies to individuals where they did not have an appropriate level of private patient hospital cover for the whole of the income year and their income for MLS purposes was above a certain amount.
Section 8B of the Medicare Levy Act 1986 (MLA 1986) states that the surcharge applies to a person without dependents who is not married during the whole or part of a financial year if the person is not covered by an insurance policy that provides private patient hospital cover.
Where a taxpayer is not covered by an appropriate insurance policy, even where it is only for part of the income year, their liability to the surcharge will be calculated according to the number of days in the income year in which they did not hold the insurance policy.
In your case, you suspended your private patient hospital cover when you went overseas.
Therefore, as you were not covered by a private patient hospital cover for the entire income year you will be liable for the MLS on the days that you did not have the cover.
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