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Edited version of your written advice
Authorisation Number: 1012709707760
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 2013
Year ended 30 June 2014
Year ended 30 June 2015
The scheme commenced on
1 July 2012
Relevant facts
You are married.
You hold basic hospital cover. However, your spouse is not covered by private health cover.
Your combined income is now above the MLS threshold.
As you and your spouse were not covered under a private health insurance policy, you are paying both private health insurance and MLS.
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 MLS.
Subsection 251R(3) of the Income Tax Assessment Act 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 21 years of age for the 2005-06 and later years of income; or
• a child of the taxpayer not less than 16 years of age, or 21 years of age for the 2005-06 and later years of income, 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
For MLS purposes, your dependants (regardless of their income) are your: spouse, even if they worked or had their own income, children under 21 years old and children 21 to 24 years old who are full-time students.
Whether the Commissioner has any discretion in relation to the imposition of the Medicare levy surcharge was discussed in McCarthy v FC of T 2002 ATC 2204. The Administrative Appeals Tribunal (AAT) held that the Commissioner has no power to remit the Medicare levy surcharge imposed on a taxpayer. The taxpayer argued that the imposition of the surcharge was unfair. The AAT held that the Commissioner had no choice but to impose the levy. The clear wording of the MLA 1986 required the surcharge to be imposed. Furthermore, the legislation did not include the discretion to waive or modify the surcharge in cases of hardship or other special circumstances, and therefore the surcharge was payable.
Therefore, as you and your dependants did not have adequate private health insurance and there are no exemptions that apply to your specific circumstances you are liable for the MLS.
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