House of Representatives

Second Reading Speech

Mr FRYDENBERG (Kooyong Assistant Treasurer)

I move

That this bill be now read a second time.

This Bill amends the Medicare Levy Act 1986 to increase the Medicare levy low income thresholds for singles, families and single seniors and pensioners in line with increases in the consumer price index. These changes will ensure that low income households who did not pay the Medicare levy in the 2013-14 income year will generally continue to be exempt in the 2014-15 income year if their incomes have risen in line with, or by less than, the consumer price index.

In addition to providing a concession to low income households, the Medicare levy low income thresholds ensure that people who pay no personal income tax due to their eligibility for structural offsets such as the low income tax offset or the seniors and pensioners tax offset do not incur the Medicare levy.

The changes to the thresholds mean that, for individual taxpayers with income under $20,896 in 2014-15, no Medicare levy will be payable. Single seniors and pensioners with no dependants who are eligible for the seniors and pensioners tax offset will not incur a Medicare levy liability if their income is less than $33,044, and couples and families (who are not eligible for the seniors and pensioners tax offset) will not be liable to pay the Medicare levy if their combined income is less than $35,261.

It is not proposed that the threshold for couples seniors and pensioners will be increased at this time. Couples who are eligible for the seniors and pensioners tax offset do not incur a Medicare levy liability when their combined income is less than $46,000. This threshold will remain sufficient to ensure that those eligible will not be liable for the Medicare levy when they are not otherwise liable to pay income tax.

The increase in thresholds will apply to the 2014-15 year and future income years.

Full details of the measure in this bill are contained in the explanatory memorandum.

Debate adjourned.