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Ruling

Subject: Medicare levy surcharge

Question 1

Are you liable for the Medicare levy surcharge?

Answer

Yes.

Question 2

Can the Medicare levy surcharge be waived?

Answer

No.

This ruling applies for the following period

Year ended 30 June 2011

The scheme commenced on

1 July 2010

Relevant facts

You are a single resident of Australia for tax purposes, without dependants.

Your income for Medicare levy surcharge purposes for the 2010-11 tax year is greater than the single surcharge threshold.

You have a private health insurance policy with an overseas company.

Reasons for decision

Paragraph 251S(1)(a) of the Income Tax Assessment Act 1936 (ITAA 1936) provides that a Medicare levy is levied at the rate applicable in the Medicare Levy Act 1986 (MLA 1986) from the 1984 year of income onwards on the taxable income of a person who at any time during the year of income was a resident.

Section 8B of the MLA 1986 provides that the amount of Medicare levy payable by a taxpayer is increased where:

· the taxpayer's income for surcharge purposes exceeds the single surcharge threshold for the year of income; and

the taxpayer:

· is not a married person (or treated as if married under subsection 251R(2) of the ITAA 1936)

· does not have dependents;

· does not have private patient hospital cover; and

· is not a prescribed person as defined in section 251U of the ITAA 1936.

This increase in the amount of Medicare levy payable is commonly known as the Medicare levy surcharge.

Subsection 3(5) of the MLA 1986 provides 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 (PHIA 2007)) that covers hospital treatment (within the meaning of the PHIA 2007) and, for a policy under which only one person is insured, any excess payable is not more than $500 in any 12 month period.

You have private health insurance with an overseas health insurance company. This health insurance company is not a registered health insurer for the purposes of the PHIA 2007. Consequently, your policy is not a complying health insurance policy under the PHIA 2007. Therefore, you are not covered by a policy that provides private patient cover within the meaning of subsection 3(5) of the MLA 1986.

You are single with no dependants and do not have the required private patient hospital cover. You have not advised that you are a prescribed person. As your income for surcharge purposes exceeds the single surcharge threshold for the year of income, you are liable to pay the surcharge under section 8B of the MLA 1986.

The legislation has no provision to allow the Commissioner to waive the Medicare levy surcharge where the criteria for liability have been met. Accordingly, you are liable for the Medicare levy surcharge.