Case U18

Members:
P Gerber SM

Tribunal:
Administrative Appeals Tribunal

Decision date: 2 January 1987.

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Dr P. Gerber (Senior Member)

The decision in this case is as ridiculous as the legislative provisions which determine the result.

2. The facts can be set out in brief outline.

• (i) The applicant is a member of the Defence Force and thus entitled to free medical treatment. He is thus a "prescribed person" and exempt from the Medicare levy imposed by Pt VIIB, which became operative as from 1 February 1984; cf. sec. 251U(1)(a).
• (ii) The applicant has a wife who at all relevant times was in receipt of wages and subject to the appropriate Medicare levy (at the relevant time 1% of her taxable income).
• (iii) Because he is a married man, and notwithstanding that he is a "prescribed person" the applicant is liable for half the prescribed Medicare levy (one-half of one per cent of his taxable income) for no better reason than that his wife is a "dependant" by definition. This is the result of sec. 251R(3) and 251R(6), the combined effect of which is that one spouse will be presumed to have contributed to the maintenance of the other spouse (whether ex-nuptial or with canonical blessing) during any period during which they resided together notwithstanding that each is in receipt of separate income. Thus for levy purposes, each is treated as a person who has a dependant and each is deemed to be a dependant of the other.

3. I was informed during the hearing that there are thousands of prescribed persons who are themselves exempt from the Medicare levy and yet liable for contribution for a spouse who is him/herself liable to pay the requisite levy. Thus sec. 251R(3) defines "dependant" to include a spouse where "the other person contributed to the maintenance of the first-mentioned person". However, where one party to a marriage or de facto relationship is a prescribed person, the notion of "dependance" for Medicare levy purposes is surely a fiction and is tantamount to a form of double tax. It seems to me that justice requires that a prescribed person married to another who is not a prescribed person and in receipt of income should be relieved of contributing to the levy for no better reason than that the basis for mutual dependance is lacking.

4. However, given the clear expression of the legislature in the Act, I am compelled to affirm the decision under review.