House of Representatives

Explanatory Memorandum

(Circulated by authority of the Treasurer, the Hon Peter Costello MP)

General outline and financial impact

Medicare levy and Medicare levy surcharge low income thresholds

This Bill amends:

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the Medicare Levy Act 1986 to:

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increase the Medicare levy low income thresholds for individuals and families. The dependent child/student component of the family threshold will also be increased. The increases are in line with movements in the consumer price index (CPI); and

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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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the A New Tax System (Medicare Levy Surcharge-Fringe Benefits) Act 1999 to:

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increase the Medicare levy surcharge low income threshold in line with movements in the CPI.

Date of effect : The increased Medicare levy and Medicare levy surcharge low income thresholds apply from the 2005-06 year of income and later years of income.

Proposal announced : This measure was announced in the 2006-07 Budget. It was also announced in the Minister for Revenue and Assistant Treasurer's Press Release No. 015 of 9 May 2006.

Financial impact : This measure will have these revenue implications:

Compliance cost impact : Negligible.