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Edited version of private ruling
Authorisation Number: 1011770264299
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Ruling
Subject: Medicare levy surcharge exemption
Question:
Are you exempt from the Medicare levy surcharge?
Answer: No
This ruling applies for the following periods
Year ending 30 June 2010
Year ending 30 June 2011
The scheme commenced on
1 July 2009
Relevant facts
You and your spouse are not prescribed persons for Medicare levy purposes and you and your spouse are not entitled to a Medicare levy exemption
You and your spouse do not have private patient hospital cover. You have two dependent children.
Your combined taxable income for Medicare levy surcharge purposes will be in excess of $101,500.
You have been employed in Australia on a 457 Long Stay visa, granted in July 20XX. Your sponsor was given the option by the government of either taking out insurance to cover your health expenses, (private health cover) or giving an undertaking to cover costs as needs be, being purely at the discretion of the sponsor. As part of your arrangement with them, your employer did not take out private health insurance for you but instead chose to pay all your medical expenses.
Reasons for decision
Liability to the Medicare levy surcharge is based on whether you are single, a single person with dependants, or have a spouse or spouse with dependants. A person, who is a member of a couple, is liable to surcharge if the combined taxable income and reportable fringe benefits of the couple is $100,000 or more. The family surcharge threshold of $100,000 is increased by $1,500 for each dependant child after the first.
Under section 8D of the Medicare Levy Act 1986 (MLA 1986), a married taxpayer is liable to pay a surcharge of one per cent on his and her taxable income if:
· the combined taxable income exceeds the family Medicare surcharge threshold,
· they are not a prescribed person as defined in section 251U of the Income Tax Assessment Act 1936, and
· they do not have an insurance policy providing private patient hospital cover.
Subsection 3(5) of the MLA 1986 states that a person is covered by an insurance policy that provides private patient hospital cover if the policy is a complying health insurance policy (within the meaning of the Private Health Insurance Act 2007) that covers hospital treatment and the family policy excess does not exceed $1000 for the year.
Neither you nor your employer has taken out a complying health insurance policy and your combined income exceeds the Medicare levy surcharge threshold. Accordingly, as you do not have appropriate private patient hospital cover as required under section 8D of the MLA 1986 you will not be exempt from the Medicare levy surcharge.