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Edited version of private advice
Authorisation Number: 1012618444436
Ruling
Subject: Medicare levy surcharge - suspended policy while overseas
Question
Will you be liable for a part year Medicare levy surcharge (MLS) if you suspend your private health insurance policy for the period you are overseas?
Answer
Yes.
This ruling applies for the following period
Year ended 30 June 2015
The scheme commences on
1 July 2014
Relevant facts and circumstances
You are a resident of Australia for tax purposes.
You and your spouse have private patient hospital cover under a private health insurance policy.
Your joint taxable income will exceed $200,000 and your income will exceed $20,542.
You are going overseas in the year ended 30 June 2015.
You understand that you cannot cancel your private health insurance policy without being liable for the MLS for not having private patient hospital cover.
You are considering suspending your private health insurance policy while you are overseas.
You are not a 'prescribed person' as defined in section 251U of the Income Tax Assessment Act 1936.
Relevant legislative provisions
Income Tax Assessment Act 1936 section 251R
Income Tax Assessment Act 1936 section 251U
Medicare Levy Act 1986 subsection 3(5)
Medicare Levy Act 1986 section 8D
Reasons for decision
Section 8D of the Medicare Levy Act 1986 (MLA) imposes an increase in the Medicare levy (commonly known as the Medicare levy surcharge) for a married person for the period they or any of their dependants, who are not prescribed persons, are not covered by an insurance policy that provides private patient hospital cover.
If you suspend your cover under your current private health insurance policy for the period you are overseas, you will not be covered by an insurance policy that provides private patient hospital cover, and as such you will be liable for the MLS for the period that the policy is suspended.