House of Representatives

Explanatory Memorandum

(Circulated by authority of the Treasurer, the Hon. P.J. Keating, M.P.)

GENERAL OUTLINE

Income Tax Laws Amendment (Medicare Levy) Bill 1983

This Bill will amend the income tax law to -

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provide for the imposition of a Medicare levy, based on taxable income, to be assessed and collected together with, but separately identified from, income tax;

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exempt from levy veterans, war widows, Defence Force personnel - and those holders of pensioner health benefits cards, health benefits cards and health care cards who receive their cards on a non-income-tested basis - who do not have dependants or whose dependants are also eligible for free health care.

The Bill also amends the tax sharing legislation to make it clear that receipts of levy are not part of the revenue pool in which the States and local government share.

Medicare Levy Bill 1983

This Bill will -

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declare the basic rate of levy for 1983-84 of 0.416%, that is, 5/12ths of the full year rate of 1%, reflecting the introduction of the Medicare arrangements from 1 February 1984, and establish 1% as the rate for the subsequent year;

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exempt from levy individuals with taxable incomes of $6698 or less and families and sole parents with family income of $11,141 or less; the family or sole parent threshold to be raised by a further $1100 for each dependent child or student;

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place a maximum of $700 ($291.20 in 1983-84) on the annual amount of levy that is payable by an individual or a married couple;

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reduce by one-half the levy payable by those veterans, war widows, Defence Force personnel, and holders on a non-income tested basis of pensioner health benefits cards, health benefits cards and health care cards, who are required to pay levy because they have dependants eligible for Medicare benefits.