Medicare levy

Contributed by AnnetteMorgan and current to 27 July 2018

This levy is imposed on your taxable income and is designed to help cover the cost of the health system which operates in Australia. The most important aspects of the levy are:

• it is imposed at a flat rate of 2 per cent of your entire taxable income;
• there is no ceiling on the amount of the levy;
• you may be either partially or totally exempt from having to pay the levy if you are a member of the Defence Forces, a veterans’ entitlement (repatriation) beneficiary, a Health Care Card holder, a nonresident or a low-income earner;
• the instruction booklets from the ATO indicate the income levels and the circumstances under which you may be entitled to receive a partial or total exemption from the levy. For example, in 2018-19 no levy would be payable by a person whose taxable income is $22,398 or less.

A lower rate of levy is payable by those who earn more than $22,399 but less than $27,997;

• if you are entitled to the Senior Australians or Pensioner tax offset , you do not have to pay the levy if your assessable income is $35,418 or less. The levy shades in at the rate of 20 cents per dollar if your income is between $35,419 and $44,272.
• an additional threshold applies if you are married (including being in a de facto relationship) or your spouse dies during the income year and you were not remarried by 30 June or you are entitled to a Invalid and invalid carer tax offset in respect of your child or you had sole care of one or more dependent children . Medicare levy is reduced if your family taxable income is equal to or less than $49,304 ($61,631 if you are entitled to the seniors and pensioners tax offset) plus $4,339 for each dependent child you have.

If your individual income is $90,000 or more, or your family income is $180,000 or more (plus $1,500 for each dependent child after the first), and you do not have private health insurance, you will have to pay an additional 1 to 1.5 per cent Medicare levy surcharge.

A tax offset/incentive is available if you have private health insurance. This is detailed above.