Edited version of private advice

Authorisation Number: 1051781483380

Date of advice: 3 December 2020

Ruling

Subject: Medicare levy - surcharge - exemption

Question

Are you exempt from paying the Medicare levy surcharge, for the second period in the 20XX-XX income year?

Answer

No

This ruling applies for the following period:

20XX-XX income year

The scheme commences on:

1 July 20XX

Relevant facts and circumstances

You are a National from another country and have been living and working in Australia under a temporary resident Visa for some time.

A condition of your Visa was that you had to take out Private visitor health cover as you were not eligible to receive Medicare benefits. To comply with this condition, you took out a Visitors Cover with Excess Policy.

At the end of the first period in the 20XX-XX income year, your tax agent filed your application for a new Visa which would give you permanent residency in Australia. It was immediately granted, and you also became a permanent resident for income tax purposes at this time.

At the start of the second period in the 20XX-XX income year, you became eligible to receive Medicare benefits. You immediately went to your local Medicare office to apply for a Medicare number, but due to Covid-19 the Medicare office was closed.

The same day, you submitted a Medicare application via email, because of the office closure. Due to a backlog, you were only issued with your Medicare number at the start of the third period in the 20XX-XX income year.

On that day following the issue of the Medicare number, you immediately purchased a complying health policy and cancelled your existing policy. This new policy exempts you from the Medicare Levy Surcharge.

You sought to backdate the change of policy to the start of the second period in the 20XX-XX income year which is when you actually began to be entitled to Medicare benefits, but your previous health provider advised that it was not possible to backdate this change.

You hold a Medicare Entitlement Statement certifying that you have been assessed as not being entitled to Medicare benefits during the first period in the 20XX-XX income year.

Relevant legislative provisions

Income Tax Assessment Act 1936 Part VIIB

Income Tax Assessment Act 1936 section 251U

Medicare Levy Act 1986 section 8D

Reasons for decision

Summary

For the second period in the 20XX-XX income year, you are subject to the Medicare levy surcharge.

You do not have a Certificate or a Statement that covers this period that would indicate that the Medicare Levy Surcharge should not apply to you.

Detailed reasoning

You are potentially subject to the Medicare Levy Surcharge under section 8D of the Medicare Levy Act 1986 if there is a period that all of the follow conditions apply to you:

•         You are a married person, and

•         Either you or one of your dependants is not covered by an insurance policy that provides private patient hospital cover, and

•         You are not a prescribed person for the purposes of the Medicare Levy Surcharge.

The 20XX-XX income year can be broken into three distinct periods for the purpose of working out if the Medicare Levy Surcharge applies to you.

The first period in the 20XX-XX income year. During this period you were a temporary resident and have received a Certificate from Medicare, stating that you were not entitled to receive Medicare Benefits during this period. Your spouse has a similar statement for the same period and you have no other dependants.

Holding these Certificates makes you a prescribed person for the first period in the 20XX-XX income year meaning that you are not subject to the Medicare Levy Surcharge during this period.

The third period in the 20XX-XX income year. Your Health Insurance Provider has issued a statement to you stating that you held an appropriate level of private patient hospital cover during this period. Your spouse holds a similar statement for the same period and you have no other dependants.

Holding these statements for the third period in the 20XX-XX income year means that you are not subject to the Medicare Levy Surcharge during this period.

The second period in the 20XX-XX income year. You do not have a Certificate or a Statement (of the types described above) that covers this period or anything else that would indicate that the Medicare Levy Surcharge should not apply to you. Therefore, the Medicare Levy Surcharge will apply to you during this period.

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