• Working out the Medicare levy adjustment

    Attention

    Warning:

    This information may not apply to the current year. Check the content carefully to ensure it is applicable to your circumstances.

    End of attention

    How you work out the Medicare levy adjustment varies depending on the number of dependent children your employee is claiming, see either:

    Employee claiming spouse and/or one to five dependent children

    Input the monthly earnings into the Medicare levy adjustment look-up toolThis link opens in a new window and find the corresponding amount of Medicare levy adjustment in the appropriate column.

    Example

    The employee has monthly earnings of $1,806.24 and is claiming four dependent children on the Medicare levy variation declaration. Input $1,806.24 into the Medicare levy adjustment look-up tool and find the corresponding Medicare levy adjustment of $9.00 from the ‘4 children’ column.

    End of example

    Employee with more than five dependent children

    How you work out the Medicare levy adjustment for an employee with more than five dependent children varies depending on the monthly earnings of your employee, refer to:

    Monthly earnings less than $4,179

    Use the ‘5 children’ column. Input the monthly earnings into the Medicare levy adjustment look-up toolThis link opens in a new window and find the corresponding amount of Medicare levy adjustment from the ‘5 children’ column.

    Example

    The employee has monthly earnings of $1,779.48 and is claiming six dependent children. Input $1,779.48 into the Medicare levy adjustment look-up tool and find the corresponding Medicare levy adjustment of $9.00 from the ‘5 children’ column.

    End of example

    Monthly earnings of $4,179 or more but less than the column B amount that corresponds to the number of dependent children claimed

    Round the monthly earnings down to the next dollar amount. Take 2% of that amount and round to the nearest dollar.

    Example

    The employee has monthly earnings of $4,239.60 and is claiming seven dependent children. Take 2% of $4,239.00 (the next lower dollar amount), this equals $84.78.

    The Medicare levy adjustment is $85, rounded to the nearest dollar.

    End of example

    Monthly earnings of $4,179 or more and greater than the column B amount but less than the column A amount that corresponds to the number of dependent children claimed

    Complete steps 1–4 below:

    1. Take 2% of the relevant column B amount. Round the result to the nearest cent.
    2. Take 8% of the difference between the monthly earnings (round down to the next dollar) and the column B amount. Round the result to the nearest cent.
    3. Subtract the result of step 2 from step 1.
    4. Round the result to the nearest dollar.

    Example

    The employee has monthly earnings of $5,000.17 and is claiming eight dependent children.

    1. 2% × $4,967.92 (column B amount for eight children)
      = $99.36
    2. 8% × ($5,000 – $4,967.92)
      = 8.0% × $32.08
      = $2.57
    3. $99.36 – $2.57
      = $96.79
    4. $97.00 ($96.79 rounded to the nearest dollar).

    The Medicare levy adjustment is $97.

    End of example

    Using a formula

    The withholding amounts shown in this table can be expressed in a mathematical form.

    If you have developed your own payroll software package, refer to Statement of formulas for calculating amounts to be withheld (NAT 1004).

    Last modified: 01 Jul 2014QC 39415