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This edited version has been archived due to the length of time since original publication.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.

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Edited version of your private ruling

Authorisation Number: 1012610625471

Ruling

Subject: Medicare Levy Surcharge Tax Offset

Question

Are you entitled to a Medicare levy surcharge tax offset?

Answer

Yes.

This ruling applies for the following period:

Year ended 30 June 2013

The scheme commences on:

1 July 2012

Relevant facts and circumstances

You were being underpaid in previous years.

After some delays all back pay was paid and you received lump sum payments in arrears.

The lump sum payments were for salary arrears greater than 12 months old.

Because you exceeded the single taxpayer threshold and do not have private health care, a Medicare levy surcharge amount is payable.

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 a Medicare levy surcharge if their income for Medicare levy surcharge purposes exceeds the relevant threshold.

The Medicare levy surcharge is imposed by sections 8B to 8G of the Medicare Levy Act 1986.

As your income was over the threshold a Medicare levy surcharge was imposed.

However, section 61-580 of the Income Tax Assessment Act 1997 (ITAA 1997) may allow a Medicare levy surcharge lump sum in arrears tax offset if the Medicare levy surcharge was imposed because you received an eligible lump payment in arrears in the year of income.

You are entitled to a Medicare levy surcharge lump sum in arrears tax offset if the following 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:

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.

In your case, you received lump sum payments in arrears as you were being underpaid during a period ending more than 12 months before you received the lump sum. Due to these payments you were subsequently charged the Medicare levy surcharge. As you satisfy the conditions, you are entitled to a Medicare levy surcharge tax offset under section 61-580 of the ITAA 1997.


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