Medicare Levy Surcharge 2007-08
Individuals and families on incomes above the Medicare levy surcharge thresholds, who do not have private patient hospital cover, may have to pay the Medicare levy surcharge (MLS) for the period they did not have this cover.
The Medicare levy surcharge is in addition to the Medicare levy. It is calculated at the rate of 1% of taxable income (including your total reportable fringe benefits).
For the 2007-08 year, the following thresholds apply:
| No. of Dependent Children or Students | Singles * | Family ** |
| 0 | 50,000 | 100,000 |
| 1 | 50,000 | 100,000 |
| 2 | 51,500 | 101,500 |
| 3 | 53,000 | 103,000 |
| 4 | 54,500 | 104,500 |
| 5 | 56,000 | 106,000 |
| Each additional child | +1,500 | +1,500 |
* Where a single taxpayer has dependants, the income and reportable fringe benefits of the dependants do not count towards the family threshold.
** The surcharge applies to the combined taxable income for MLS purposes and reportable fringe benefits of the taxpayer and their spouse.
Budget Update
The Government announced in the May 2008 Federal Budget that from 1 July 2008 the Medicare levy surcharge (MLS) thresholds will be increased to $100,000 for singles and $150,000 for families. These particular increases did not make it through the Senate.
However, in October 2008, parliament did pass legislation increasing the MLS income threshold for singles to $70,000 (up from $50,000) and $140,000 for couples and families (up from $100,000) – the family threshold increases by $1,500 for each child after the first.
The changes are to take effect as of 1 July 2008 for the 2008-09 financial year upon receipt of Royal Assent from the Governor General.
Transitional provisions apply so if you have dropped, or avoided applying for, health insurance after 1 July due to the initial proposed changes to the MLS thresholds (singles $100,000, couples/families $150,000), a provision has been created by government to help ensure that you are not disadvantaged. Under the provision, persons earning above the new MLS thresholds will not incur the surcharge so long as they purchase an appropriate level of hospital cover with a private health insurance fund before 1 January 2009. This cover must also be maintained for the rest of the 2008-09 financial year.
More Information
More information on the Medicare Levy Surcharge for 2007-08 is available from the ATO MLS page. This includes detailed information on appropriate cover, who is a dependant, taxable income for MLS purposes, part-year liability, and more.
This information is for guidance only and is not intended as specific advice to any reader. Professional advice should be obtained before acting on any information contained herein. The publisher accepts no responsibility for loss occasioned to any person or organisation as a result of action or the refrain of action as a consequence of the contents of this publication.