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This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law.

You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4.

Edited version of your private ruling

Authorisation Number: 1012521884413

Ruling

Subject: Medicare levy surcharge

Question

Are you liable for the Medicare levy surcharge (MLS) where you are covered by an overseas health insurance policy?

Answer

Yes

This ruling applies for the following period:

Year ended 30 June 2013

The scheme commences on:

1 July 2012

Relevant facts and circumstances

You and your spouse are covered under a private health insurance policy provided by your employer.

The private health insurance policy is an overseas health insurance policy.

Relevant legislative provisions

Medicare Levy Act 1986 Section 8D

Medicare Levy Act 1986 Subsection 3(5)

Reasons for decision

The MLS is imposed by the Medicare Levy Act 1986 (MLA).

Section 8D of the MLA provides that a taxpayer will be liable to pay the MLS for any part of an income year where:

    · during the whole of the year the taxpayer is married;

    · the taxpayer, their spouse and all of their dependents are not covered by a health insurance policy that provides private patient hospital cover; and

    · the taxpayer and their spouse's combined income for MLS purposes for the year exceeds $168,001.

The rate of MLS imposed depends upon your combined income as follows:

    $168,001 - $194,000 1%

    $194,001 - $260,000 1.25%

    $260,001 and above 1.5%

Subsection 3(5) of the MLA states the following:

    For the purposes of this Act, a person is covered by an insurance policy that provides private patient hospital cover if:

    (a) the policy is a complying health insurance policy (within the meaning of the Private Health Insurance Act 2007) that covers hospital treatment (within the meaning of that Act); and

    (b) any excess payable in respect of benefits under the policy is no more than:

    (i) $500 in any 12 month period, in relation to a policy under which only one person is insured; and

    (ii) $1,000 in any 12 month period, in relation to any other policy.

Your situation is similar to that of the taxpayer in Adam Fraser v. Commissioner of Taxation [2000] AATA 738. In that case Mr Fraser was a member of BUPA International. The Private Health Insurance Administration Council confirmed in this case that BUPA International is not on the Register of Health Benefit Organisations.

The registration procedure contained in the Private Health Insurance Act 2007 imposes a wide range of conditions of registration including regular provision of information, non-discrimination, minimum reserves etc. and registered organisations are subject to significant scrutiny and controls by the Minister and his department.

As your overseas health insurance policy is not on the Register of Health Benefit Organisations, it cannot issue complying health insurance policies. As you are not covered by a complying health insurance policy, when you and your spouse's combined income for MLS purposes is greater than the threshold, you will be liable for the MLS.


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