Explanatory Memorandum
(Circulated by authority of the Treasurer, the Hon Peter Costello, MP)General outline and financial impact
Amendments relating to Medicare levy
This bill amends:
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- the MLA 1986to:
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- increase the Medicare levy low income thresholds for individuals, married couples and sole parents. The dependent child/student component of the family threshold will also be increased. The increases are in line with movements in the CPI;
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- increase the Medicare levy low income threshold for pensioners below age pension age so that they do not have a Medicare levy liability where they do not have an income tax liability; and
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- to allow a family income threshold to apply to a taxpayer where the taxpayer is entitled to a child-housekeeper rebate or a housekeeper rebate;
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- the MLS-FB 1999 to:
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- increase the Medicare levy surcharge low income threshold in line with movements in the CPI; and
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- the ITAA 1936 to:
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- make a technical amendment to correct references to the provisions of the VEA 1986.
Date of effect: The increased Medicare levy and Medicare levy surcharge low income thresholds will apply from the 2001-2002 year of income and later years of income.
The technical amendment to the Medicare levy family income threshold applies to assessments for the 2000-2001 year of income and later years of income.
The technical amendment of the ITAA 1936 to the definition of prescribed persons for Medicare levy purposes applies to assessments for the 1997-1998 year of income and later years of income.
Proposal announced: The measure was announced in the 2002-2003 Federal Budget.
Financial impact: The measure will cost revenue $42.8 million in 2002-2003, $21.4 million in 2003-2004, $21.4 million in 2004-2005 and $21.4 million in 2005-2006.
Compliance cost impact: Compliance costs will be negligible.