| Disclaimer This edited version has been archived due to the length of time since original publication.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 private advice
Authorisation Number: 1012681084422
Ruling
Subject: Medicare levy surcharge
Question
Are you liable for Medicare levy surcharge (MLS)?
Answer
Yes.
This ruling applies for the following period
Year ended 30 June 2013
The scheme commenced on
17 December 2012
Relevant facts
You held an International policy which covers 100% of you and your family's hospital costs and a portion of ancillary costs.
Your taxable income is above the MLS threshold amount.
The policy is not an applicable benefits arrangement.
Relevant legislative provisions
Medicare Levy Act 1986 Section 8D
Medicare Levy Act 1986 Subsection 3(5)
National Health Act 1953 Section 5A
Reasons for decision
Section 8D of the Medicare Levy Act 1986 (MLA 1986) allows an increase of an additional amount of the Medicare levy, where a taxpayer earns income in excess of the relevant threshold and does not have adequate private health insurance for the whole or part of an income year. This increase is known as the MLS.
A liability for the MLS arises where you do not have the required private patient hospital cover and your taxable income exceeds the threshold amount.
Private patient hospital cover is defined in subsection 3(5) of the MLA 1986. It states that:
A person is covered by an insurance policy that provides private patient hospital cover if the policy is an applicable benefits arrangement within the meaning of section 5A of the National Health Act 1953 (NHA 1953).
An 'applicable benefits arrangement' is one that a registered organisation has entered into with a contributor, conducted by that fund, and under which the contributor is covered (wholly or partly) for liability to pay fees and charges in respect of various medical services and treatments and that are professional services in respect of which a Medicare benefit is payable.
You have an International policy. The policy is not an arrangement between the contributor and a registered organisation for the purposes of section 5A of the NHA 1953.
Therefore, the policy is not an 'applicable benefits arrangement' for the purposes of section 5A of the NHA 1953. Accordingly, the policy does not provide appropriate private patient hospital cover.
Whether the Commissioner has any discretion in relation to the imposition of the Medicare levy surcharge was discussed in McCarthy v FC of T 2002 ATC 2204. The Administrative Appeals Tribunal (AAT) held that the Commissioner has no power to remit the Medicare levy surcharge imposed on a taxpayer. The taxpayer argued that the imposition of the surcharge was unfair. The AAT held that the Commissioner had no choice but to impose the levy. The clear wording of the MLA 1986 required the surcharge to be imposed. Furthermore, the legislation did not include the discretion to waive or modify the surcharge in cases of hardship or other special circumstances, and therefore the surcharge was payable.
There are no exemptions that apply to your specific circumstances. Therefore, you are liable for the MLS.