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Edited version of your written advice
Authorisation Number: 1051215803427
Date of advice: 21 April 2017
Ruling
Subject: Medicare Levy Surcharge - Foreign private health insurance policies
Question
Do you have a complying health insurance policy for the purpose of a Medicare Levy Surcharge?
Answer
No
This ruling applies for the following periods
Financial year ended 30 June 2013
Financial year ended 30 June 2014
Financial year ended 30 June 2015
Financial year ended 30 June 2016
The scheme commences on
1 July 2012
Relevant facts and circumstances
You have a health insurance policy issued through a foreign policy provider.
All hospital treatment is paid in full by the insurer.
There is no excess payment on your policy.
Relevant legislative provisions
Section 251S of the Income Tax Assessment Act 1936
Section 3 of the Medicare Levy Act 1986
Section 8B of the Medicare Levy Act 1986
Reasons for decision
Medicare Levy Surcharge - overview
Paragraph 251S(1)(a) of the ITAA 1936 provides that a Medicare levy is levied at the rate applicable in the Medicare Levy Act 1986 (MLA) 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 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 does not have private patient hospital cover.
This increase in the amount of Medicare levy payable is commonly known as the Medicare levy surcharge.
As your ruling requests information on private patient hospital cover, we need to consider the definition of private patient hospital cover in accordance with the MLA.
Private patient hospital cover
Subsection 3(5) of the MLA 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 1997 (PHIA 1997)] that covers hospital treatment where excess payable is not more than $500 in any 12 month period. You have indicated that your policy has zero excess.
It is necessary to determine if your fund satisfies the complying health insurance policy requirements.
There is a list of registered health funds available on www.privatehealth.gov.au. A registered health fund is a complying health insurance provider registered with APRA. The Private Health Insurance Ombudsman's homepage has a link on “Visiting from overseas?” which has the following information:
General treatment cover without hospital cover will not provide an exemption; and Overseas Visitors Cover, Overseas Student Health Cover or cover held with an international insurer will not provide an exemption. If you hold appropriate hospital cover but temporarily suspend payments for that cover (for example, to travel overseas), then you are not exempt during the suspended period.
Complying private insurance policy
Division 63 of the PHIA 1997 requires a private health insurer is to ensure that the only kind of insurance it makes available as part of its health insurance business is insurance in the form of complying health insurance products.
The Private Health Insurance (Prudential Supervision) Act 2015 [PHI(PS)A 2015] sets out the registration process for private health insurers, imposes requirements about how private health insurers conduct health insurance business and deals with other matters in relation to the prudential supervision of private health insurers
Paragraph 12(1)(a) of the PHI(PS)A 2015 provides that in order for a body to apply for registration it is required to be a company as defined in the Corporations Act 2001 being a company registered in Australia.
Conclusion
You have private health insurance is an overseas policy with a foreign insurance company. Your policy is not from an APRA listed complying health insurance insurer.
You are not covered by a policy that provides private patient cover within the meaning of subsection 3(5) of the MLA.
You do not have a complying health insurance policy for the Medicare Levy Surcharge.