Page tree


 

 

If you or any of your dependants do not have the appropriate level of health cover and your taxable income for surcharge purposes is above the relevant threshold the Medicare Levy surcharge will be raised and included in the estimate.

Depending on your income for Medicare levy surcharge (MLS) purposes, the MLS rate is 1%, 1.25% or 1.5% of:

Your income for surcharge purposes includes your:

  • taxable income (including the net amount on which family trust distribution tax has been paid)

  • exempt foreign employment income if your taxable income is $1 or more

  • reportable fringe benefits amount, as reported on the payment summary

  • total net investment loss (includes both net financial investment loss and net rental property loss)

  • reportable super contributions (includes both reportable employer super contributions and deductible personal super contributions).

However, if you are aged 55 to 59 years old, you deduct any taxed element of a super lump sum, other than a death benefit, which you received that does not exceed your Low rate cap on super lump sum benefits.

If you exceed the threshold, you are liable to pay the Medicare levy surcharge.

Income for surcharge purposes is only used to determine whether you are liable to pay the Medicare levy surcharge. It is not used to calculate how much surcharge you pay.

The Medicare levy surcharge is only levied on the total of your taxable income and total reportable fringe benefits amount (including the net amount on which family trust distribution tax has been paid).

Refer to the ATO link for Medicare Levy Surcharge income threshold

 

Fund Detail

Select Details of Funds to add the details of the Fund policy which are required to determine the level of health cover and hence the number of days NOT liable for the surcharge.

Details of Funds

Name of Fund: Press [F10] to select from a list of valid Fund providers. The list extends over several pages, to access extra pages select the entries 'next' and 'back'.

Membership days: Where the fund membership commenced or terminated during the year the number of days may be calculated using the Date Range Calculator provided by clicking [F7].

Start Date: Where the membership days are less than 365 the Start Date for the membership also needs to be provided.

Membership No.: Enter the taxpayer's fund membership number.

Cover Type: Press [F10] to select from a list of codes defining the type of cover held.

No. of Dependants during this cover period: Enter the number of dependent children in the taxpayer's care during the period that this health cover was held. This field is active if the Number of dependent children entered in the Medicare Levy Surcharge/Private Health Insurance Offset screen equals one or more.

Medicare Levy Surcharge and Fund membership details

These are largely self-explanatory.

For the whole year were you and all dependants covered by private hospital cover? Select this checkbox to answer Yes.

Resident: Select this checkbox to indicate that the taxpayer is a resident of Australia.

Marital status: Click [F10] to select from the list. If the field is left blank, the taxpayer is considered to be single.

Date Married From / To: Only enter dates if you were married or separated during the year. Dates must be within the relevant income year.

Priority Agreement: De-select this to record the share of the offset to the taxpayer as an amount less than 100%.

Share of offset to the taxpayer: This will be 100% where a Priority Agreement is indicated.

Number of dependent children: Enter the number of eligible dependent children.

Zero Amount?: Select this checkbox to indicate that the number of dependent children is zero.

Number of children remaining with the taxpayer: Enter the number of eligible children who are dependants of the taxpayer and remained with the taxpayer following a separation from the spouse.

Income Details: The field displays the details of the income for Medicare levy surcharge purposes and Private Health Insurance Rebate for the taxpayer and the spouse. These are derived from amounts entered in the Income Details dialog; refer to Income Test Details (below). From the Income Details dialog you can access the Spouse Details dialog where the income for the spouse is entered, refer to Spouse Details dialog.

Income Test Details

All the amounts in this dialog for both the taxpayer and spouse are pre-filled from information entered elsewhere in the Income Tax Return or from information entered in the dialogs in the Calculator.

The amounts are required in order to calculate the Combined Taxable Income for Medicare Levy surcharges and Private Health Insurance Rebate (PHIR) purposes.

The formula for assessing whether the taxpayer is liable to the Medicare Levy surcharge is as follows:

  • The Taxpayer:
    • Taxable Income, PLUS
    • Reportable Fringe Benefits, PLUS
    • Reportable superannuation contributions (Employer contributions + Personal contributions), PLUS
    • Amounts on which FTD tax has been paid, PLUS
    • Total investment losses (Net financial investment losses + Net rental property losses), LESS
    • Any taxable component of a superannuation lump sum where the tax rate is zero, PLUS
    • Exempt foreign employment income
  • The Spouse:
    • Taxable Income, PLUS
    • Reportable Fringe Benefits, PLUS
    • Reportable superannuation contributions (Employer contributions + Personal contributions) PLUS
    • Amounts on which FTD tax has been paid, PLUS
    • Total investment losses (Net financial investment losses + Net rental property losses), LESS
    • Sec 98 distributions from trusts where tax has been paid, LESS
    • Any taxable component of a superannuation lump sum where the tax rate is zero

The taxpayer may be entitled to a MLS Lump sum in Arrears offset if, due to a Lump sum in arrears received by the taxpayer’s spouse, the taxpayer’s surchargeable income has been lifted above the MLS Surcharge Levy Threshold. Refer to Eligibility for the MLS LPSIA Tax Offset.

Total Surchargeable Income: This is the total of the above amounts.

Pressing [Enter] at any field in the Spouse Income fields will open the Spouse Details dialog, Spouse Details.

Other Details relevant to the Calculation

These are adjustment fields to be used for complex family situations.

Days had a spouse: This amount is calculated by the system from the dates entered in the Dates Married field.

Days under the MLS threshold: This amount is calculated by the system from other information entered in the dialog.

Days exempt from Medicare: This amount is calculated by the system from all the other details entered in the dialog.

Days in fund: This amount is calculated by the system from all the other details entered in the dialog.

Add: Days otherwise not liable: This field is provided for the user to adjust the number of days Liable where the taxpayer and/or spouse have different Health Cover and for other complex situations where the system cannot calculate the adjustment days.

Less: Days exemption overlap or are otherwise n/a: This field is provided for the user to adjust the number of days Liable and is to account for overlap days where there is full or part year residency and an exemption to the Medicare levy and Fund membership, and the Fund membership days and Medicare exemption days occur simultaneously.

Number of days not liable for surcharge (maximum 365): This field is calculated by the system and is the sum of all the above fields limited to 365 days in any income year (366 in a leap year).