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Edited version of your private ruling
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Ruling
Subject: Medicare levy surcharge
Question
Are you liable for Medicare Levy Surcharge (MLS)?
Answer
Yes.
This ruling applies for the following period
Year ended 30 June 2012
The scheme commenced on
1 July 2011
Relevant facts
You are married and have a child with your spouse.
You have other children who reside with your former spouse.
You pay child support for your children who live with your former spouse.
You hold private health insurance for yourself, your spouse and the child who lives with you.
Relevant legislative provisions
Medicare Levy Act 1986 Section 8D
Income Tax Assessment Act 1936 Subsection 251R(3)
Reasons for decision
Section 8D of the Medicare Levy Act 1986 (MLA) allows an increase of an additional 1% in the Medicare levy, where a taxpayer earns income in excess of the relevant threshold and does not have adequate private health insurance for themselves and all their dependants. This increase is known as the Medicare levy surcharge (MLS).
Subsection 251R(3) of the Income Tax Assessment Act 1936 (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;
· the person was either:
a spouse of the taxpayer;
a child of the taxpayer less than 16 years of age; or
a child of the taxpayer not less than 16 years of age 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 payment of child support is regarded as contributing to the maintenance of a dependant. This is the case irrespective of whether the support is provided direct to the care giver or paid through some other avenue such as via Child Support Agency.
You maintained a dependant if any of the following applied:
· you and your dependant lived in the same house
· you gave your dependant food, clothing and lodging
· you helped them to pay for their living, medical and educational costs.
In your case, you contributed to your children's maintenance via child support payments. Accordingly, your children are dependants for MLS purposes as defined in subsection 251R(3) of the ITAA 1936.
As you are considered to have X dependant children and not all are covered by adequate private health insurance, you are liable for MLS.
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