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Edited version of your private ruling
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Ruling
Subject: Medicare levy surcharge
Question
Are you entitled to a Medicare levy surcharge tax offset?
Answer: No.
This ruling applies for the following period
Year ended 30 June 2012
The scheme commenced on
1 July 2011
Relevant facts
Your spouse received a lump sum A payment for unused annual leave.
The payment put your family income over the relevant threshold for Medicare levy surcharge purposes. Medicare levy surcharge was imposed.
You expect your family income to be much less in the 2012-13 income year as your spouse's annual salary is less and you are not working. Your family income in the previous two years was also less than the relevant Medicare levy surcharge threshold.
Relevant legislative provisions
Medicare Levy Act 1986 Sections 8B to 8G.
Income Tax Assessment Act 1997 Section 61-580
Income Tax Assessment Act 1997 Section 61-590
Income Tax Assessment Act 1936 Section 159ZR
Reasons for decision
Taxpayers without adequate private patient hospital cover through health insurance are liable to pay an additional 1% Medicare levy surcharge if their income for Medicare levy surcharge purposes exceeds the relevant threshold. For example, a taxpayer without private patient hospital cover who had a spouse during the income year will pay the Medicare levy surcharge if their income for surcharge purposes exceeds $160,000 for the 2011-12 income year.
The Medicare levy surcharge is imposed by sections 8B to 8G of the Medicare Levy Act 1986.
As your family income for the 2011-12 income year was over $160,000 a Medicare levy surcharge was imposed.
Subsection 61-580(2) of the ITAA 1997 may allow a Medicare levy surcharge lump sum in arrears tax offset if your spouse received a Medicare levy surcharge lump sum and other conditions are met.
A Medicare levy surcharge lump sum for the tax offset purposes is defined in section 61-590 of the ITAA 1997 to be:
§ A lump sum payment of eligible income (within the meaning of section 159ZR of the Income Tax Assessment Act 1936 (ITAA 1936)) that is included in the individual's assessable income for the current year (but only to the extent that it accrued in an earlier income year); or
§ A lump sum payment that is included in the individual's exempt foreign employment income for the current year (but only to the extent that it accrued during a period ending more than 12 months before the date of which it was paid).
Under section 159ZR of the ITAA 1936 eligible income includes salary or wages to the extent to which they accrued during a period ending more than 12 months before the date on which they are paid. However, salary and wage for section 159ZR purposes does not include unused leave payments.
The lump sum A payment for unused leave does not qualify as a Medicare levy surcharge lump sum for the tax offset purposes.
We acknowledge that your specific circumstances. However the legislation does not provide any alteration or discretion in your circumstances. You are not entitled to a Medicare levy surcharge tax offset under section 61-580 of the ITAA 1997.
There are no other provisions that allow a reduction of your Medicare levy surcharge.
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