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This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law.

You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4.

Edited version of your private ruling

Authorisation Number: 1012579068696

Ruling

Subject: Medicare levy

Question

Are your grandchildren considered to be your dependants for the purposes of calculating your liability for Medicare levy?

Answer

Yes.

This ruling applies for the following periods:

Year ended 30 June 2001

Year ended 30 June 2002

Year ended 30 June 2003

Year ended 30 June 2004

Year ended 30 June 2005

Year ended 30 June 2006

Year ended 30 June 2007

Year ended 30 June 2008

Year ended 30 June 2009

Year ended 30 June 2010

Year ended 30 June 2011

Year ended 30 June 2012

Year ended 30 June 2013

The scheme commences on:

1 July 2000

Relevant facts and circumstances

You are the primary carer of your grandchildren.

The Court ordered that your grandchildren live with you.

You receive no financial support for your grandchildren from their parents. One parent is a resident of another country and the whereabouts of the other is unknown.

You have had care of your grandchildren for many years.

You received benefits from Centrelink who recognise your grandchildren as your dependants.

Relevant legislative provisions

Income Tax Assessment Act 1936 Section 159R

Income Tax Assessment Act 1997 Section 995-1

Reasons for decision

Summary

Your grandchildren are considered to be your dependants for the purposes of determining your liability to Medicare levy.

Detailed reasoning

An individual who is a resident of Australia at any time during the financial year is liable to pay a Medicare levy based on their taxable income for the year. The legislation governing the levy is contained in sections 251R to 251Y of the Income Tax Assessment Act 1936 (ITAA 1936) and in the Medicare Levy Act 1986.

Medicare levy is payable where the individual's taxable income exceeds a set amount ('the threshold'). Where the individual has dependants the amount of the threshold is increased to take into account the individual's responsibilities for the dependants. This results in a lower Medicare levy being payable to that paid by an individual without dependants who has the same taxable income.

Currently, subsection 251R(3) of the ITAA 1936 deems a person to be a dependant of another individual if the first mentioned person was:

Prior to 1 July 2005, a dependant was defined as:

The term 'child' is defined in section 995-1 of the Income Tax Assessment Act 1997 to include:

In your situation, the Court requires your grandchildren to reside with you. You provide full care and support, both emotionally and financially. Additionally, Centrelink recognises your grandchildren as your dependants.

Whilst it is not free from doubt, given your circumstances, it considered that your grandchildren are your dependants for the purposes of determining your liability to Medicare levy.

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