Explanatory Memorandum
(Circulated by authority of the Minister for Health, the Honourable Greg Hunt MP)Notes on Clauses - A New Tax System (Medicare Levy Surcharge - Fringe Benefits) Amendment (Excess Levels For Private Health Insurance Polices) Bill 2018
Preliminary
Clause 1 - Short Title
This clause provides that the Bill, once enacted, may be cited as the A New Tax System (Medicare Levy Surcharge-Fringe Benefits) Amendment (Excess Levels for Private Health Insurance Policies) Act 2018.
Clause 2 - Commencement
This clause sets out when the A New Tax System (Medicare Levy Surcharge-Fringe Benefits) Amendment (Excess Levels for Private Health Insurance Policies) Bill 2018 and various provisions with it commence. The commencement date is 1 April 2019.
Clause 3 - Schedule(s)
This clause provides that legislation that is specified in a Schedule to the Act is amended or repealed as set out in the applicable items in the Schedule concerned, and any other item has effect according to its terms.
Schedule 1 - Amendments
The amendments give effect to new maximum voluntary excess levels that are permitted for a complying health insurance policy to exempt the holder from the Medicare Levy Surcharge. They also remove transition provisions designed to deal with the replacement in 2007 of the concept of "applicable benefit arrangements" under the National Health Act 1953 with the concept of a "complying health insurance policy" under the PHI Act.
The amendments also remove the grandfathering provision that provide an exemption from the Medicare Levy Surcharge for individuals who had policies with excesses greater than the maximum permitted excess who have been insured continuously since May 2000 as long as their excess amount has not increased since that time. This exemption from the Medicare levy surcharge will no longer be available.
A New Tax System (Medicare Levy Surcharge-Fringe Benefits) Act 1999
Item 1
This item will amend the numbering of section 4 to omit the subsections as all but sub-section 1 have been repealed over time.
Item 2
This item repeals paragraph 4(1)(b) of the Act that limits excess levels to $500 in any 12 month period in relation to a policy which only one person is insured, and $1000 in any 12 month period in relation to any other policy. A new paragraph 4(1)(b) will substitute for the repealed paragraph, and it will define the applicable excess levels by referencing the applicable excess levels specified in section 45-1 of the Private Health Insurance Act 2007.
Item 3
This item repeals subsection 4(2), (4) and (5). Subsection 4(2) is a grandfathering provision that extended the Medicare levy surcharge exemption allowing individuals who has been insured continuously since the end of May 2000 as long as their excess amount had not increased in that time. As a result of the repealing of subsection 4(2), certain individuals may become liable for the Medicare levy surcharge if they do not transfer to a product with an excess no more than the new maximum levels.
Subsections 4(4)-(5) have been repealed as these provisions were made redundant by the Private Health Insurance (Transitional Provisions and Consequential Amendments) Act 2007 Part 3 section 10.
Item 4
This item is an application provision which provides that for taxation purposes, the amendments made by items 2 and 3 in Schedule 1 apply in relation to the 2018-19 and later income years.