House of Representatives

Income Tax Laws Amendment (Medicare Levy) Bill 1983

Income Tax Laws Amendment (Medicare Levy) Act 1983

Second Reading Speech

by the Minister for Housing and Construction and Minister Assisting the Treasurer, the Hon. Chris Hurford, M.P.

By this Bill, and another that I shall introduce shortly, it is proposed to impose a Medicare Levy of one per cent of the taxable income, as determined for income tax purposes, of people residing in Australia.

The Bills are a finance-raising complement to other measures designed to implement the Government's Universal Medicare Scheme.

Other basic features of the scheme are contained in legislation that has been introduced by my colleague the Minister for Health.

Introduction of the Levy is timed to coincide with the coming into operation of the main Medicare Legislation on 1 February 1984.

Because the Medicare arrangements will apply for only five months of 1983-84, the rate of levy to be applied to 1983-84 taxable incomes is set at five-twelfths (or 0.416 per cent) of the annual rate of one per cent.

At the upper end of the income scale, the maximum amount of levy payable by a taxpayer or by a married couple will be $291.20 for 1983-84 and $700 for a full year.

For low income taxpayers there are relieving provisions which have the effect that a person whose taxable income is less than $6,699 will not be liable for the levy.

There are further relieving provisions in respect of people responsible for maintaining dependants. These will apply to both married couples and sole parents.

In these cases the levy will not be payable where the person's taxable income together with, where the person has a spouse, the taxable income of his or her spouse, is not more than $11,141. And this threshold is to be further increased by $1,100 for each dependent child or student maintained by the taxpayer or his or her spouse.

Thus, for example, a married couple with two dependent children will not pay any levy unless the aggregate of the couple's taxable incomes is more than $13,341.

Provision is also being made to give relief from the levy to certain classes of persons, including veterans and war widows.

The broad principle is that a veteran or war widow who is personally entitled under repatriation arrangements to full free medical treatment for all medical conditions, whether or not war-caused, and who has no dependants or who has dependants who are also entitled to such medical benefits, will be completely free from payment of levy.

If the repatriation beneficiary is entitled to full cover personally but has a spouse or one or more dependent children not fully covered by a repatriation scheme, relief will be given for one-half of the levy that would otherwise be payable.

Defence Force personnel and those people who hold pensioner Health Benefits Cards, Health Benefits Cards or Health Care Cards on a non-income tested basis will be eligible for relief from the levy on the same terms as proposed for repatriation beneficiaries.

For these purposes the spouse of a veteran or a child under 16 will be treated as a dependant if the veteran contributes in any way to their maintenance.

A child who is aged 16 or more but less than 25 and who is a full-time student will be treated as a dependant if his or her separate net income is not above $1,785.

A fundamental objective of the legislation is to integrate collection of the levy with the collection of income tax.

This has distinct administrative advantages and is the most economical and sensible course to follow.

It does, however, require a number of provisions of a technical kind.

Much of what is contained in the Bills is concerned with these technicalities and explanations of the various provisions are contained in an explanatory memorandum which I have arranged for Honourable members to receive.

I mention in particular that P.A.Y.E. deductions from salaries and wages will be increased from 1 February 1984 to take account of the levy. The legislation also provides for a separate identification in assessments of the amount of a taxpayer's liability for Medicare Levy, as distinct from income tax liability.

The Bill will also amend the tax sharing legislation to make it clear that collections of levy are not to form part of the revenue in which the States and Local Government share, given that the levy is being introduced to offset Commonwealth expenditure on Medicare.

The various terms of the Bill, including technical clauses that provide for levy to be payable on certain income derived by trustees and for people living in the external territories to be exempt, are, as I have already indicated, explained in a memorandum that will be made available to Honourable members.

In these circumstances, I think I need say no more at this stage about particular features of the Bill.

I commend this Bill to the House.

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