What is the Medicare Levy and Medicare Levy Surcharge?

The Medicare Levy

The Medicare levy is in place to help fund the Medicare scheme and most Australian residents are required to pay 1.5% of their taxable income.

You maybe exempt from the Medicare Levy if:

•           Your taxable income is equal to or less than the lower tax threshold. (If taxable income is greater this but less than the upper limit you would only need to pay part of the Medicare levy)

•           If you were a foreign resident or resident of Norfolk Island for some of part of the year

•           If you were a blind pensioner, received a Centrelink Sickness Allowance or have an entitlement to full medication treatment under Defence Force/Veterans Affairs arrangements

The levy is applied when calculating your tax return at the end of the financial year.

 The Medicare Levy Surcharge

The Medicare Levy Surcharge is an additional charge on people earning high incomes that do not have private patient hospital cover.

The Medicare Levy Surcharge is 1.% of taxable income, in additional to the standard Medicare Levy.

The definition of a high income from the ATO depends on a number of factors. For example:

•           If you were a single person with no dependants and had a taxable income greater than $70,000 you would need to pay the Medicare Levy Surcharge

•           If you are a member of a family, with one child and the combined taxable income was above $140,000 you would need to pay the Medicare Levy Surcharge.