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Check your client’s family circumstances

Last updated 14 September 2023

Accurately reporting your client's family details is critical to correctly calculate the Medicare levy, Medicare levy surcharge (MLS) or private health insurance rebate amounts. Getting this right will help avoid an audit or delays in processing.

You must report the number of days that everyone – your client, their spouse and all dependents – had appropriate private patient hospital coverage.

If your client’s income for MLS purposes is greater than the MLS threshold and they have appropriate private hospital cover, they will only be exempt from the MLS if their spouse and all dependents are either:

  • in a Medicare levy exemption category
  • covered by appropriate private patient hospital cover.

Three things you need to confirm when completing your client’s tax return:

  1. their spouse’s income for MLS purposes, if applicable
  2. the status of any dependents matches the private hospital insurance policy – for example, a couples or a singles policy may not appropriately cover dependents
  3. whether private patient hospital cover is held for the whole family, for the full period – enter the number of days covered at label M2A.

A dependant for MLS purposes is under 21 years of age, or under 25 if they are a full-time student. This definition may vary from your client’s insurance policy.

If your client isn’t entitled to Medicare benefits:

  • and is claiming the Medicare levy exemption, they will need a Medicare Entitlement Statement (MES) from Services AustraliaExternal Link before you lodge their tax return
  • they will only be able to claim the full Medicare levy exemption if their spouse is also in an exemption category
  • they are not entitled to any private health insurance rebate.

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