Medicare items

Medicare levy reduction or exemption

Australian residents for tax purposes are subject to a Medicare levy of 2.0% of their taxable income unless they qualify for a reduction or exemption.

If you were not an Australian resident for tax purposes for 2015–16, you may be exempt from the Medicare levy.

A Medicare levy reduction is based on your taxable income. A Medicare levy exemption is based on specific categories. You need to consider your eligibility for a reduction or an exemption separately.

For more information, see:

• Medicare levy reduction
• Medicare levy exemption

Completing this section

1. Enter the Number of dependent children and students.
2. Indicate if you were in one of the exemption categories at any time during 2015–16.
   If Yes, go to step 3.
   If No, go to the Medicare levy surcharge section.
3. Enter the number days you qualify for full exemption, in Full 2% levy exemption - number of days.
4. Enter the number days you qualify for half exemption, in Half 2% levy exemption - number of days.
5. If you entered one or more days in Full 2% levy exemption - number of days, answer the question Were you a temporary resident for Medicare purposes and have a Medicare entitlement statement from Services Australia?
6. Go to the Medicare levy surcharge section.

Medicare levy surcharge (MLS)

Depending on your income for Medicare levy surcharge (MLS) purposes, the MLS rate is 1%, 1.25% or 1.5% of:

• your taxable income
• your total reportable fringe benefits, and
• any amount on which family trust distribution tax has been paid.

You may have to pay the MLS if:

• you or your dependants (including your spouse, even if they had their own income) did not have an appropriate level of private patient hospital cover for the whole of 2015–16, and
• your income for MLS purposes was above a certain amount.

Your health insurer must give you a statement showing the number of days that you and all your dependants had appropriate cover in 2015–16. If you do not have this statement, or are not sure if you had an appropriate level of private patient hospital cover, contact your health insurer.

Appropriate level of private patient hospital cover

An appropriate level of private patient hospital cover is cover provided by a registered health insurer for hospital treatment in Australia which has an excess of:

• $500 or less (for a policy covering only one person), or
• $1,000 or less (for all other policies).

Excess is the amount you pay before your health insurer pays for any claim you make.

General cover (formerly called ancillary cover) or 'extras' is not private patient hospital cover because it covers only items such as optical, dental, physiotherapy or chiropractic treatment.

Dependants

Your dependants (regardless of their income) are your:

• spouse, even if they worked during 2015–16 or had their own income
• children under 21 years old
• children 21 to 24 years old who are studying full time at school, college or university.

Your dependants must have been Australian residents for tax purposes in 2015–16 and you must have contributed to their maintenance (for more information, see Maintaining a dependant).

Medicare levy surcharge exemptions

You are exempt from MLS for the whole of 2015–16 if you fit into one of the categories in table 1.

Table 1: Exemption categories

You and all your dependants were in a Medicare levy exemption category for the whole of 2015–16.

You were single for the whole of 2015–16, and: for the whole of 2015–16 you did not have a dependent child, and your income for MLS purposes was $90,000 or less.

You were single for the whole of 2015–16, and: you had a dependent child for all of 2015–16, and your income for MLS purposes was $180,000 or less (plus $1,500 for each dependent child after the first).

You were single for part of 2015–16, and: for the whole of 2015–16 you did not have a dependent child your spouse did not die during the year, and your income for MLS purposes was $90,000 or less.

You had a spouse (with or without dependent children) for the whole of 2015–16, and your combined income for MLS purposes was: $180,000 or less (plus $1,500 for each dependent child after the first), or greater than $180,000 (plus $1,500 for each dependent child after the first) but your own income for MLS purposes was $21,335 or less. If you had a spouse on 1 July 2015, your spouse died during 2015–16 and you did not have another spouse before the end of the year, assume that you had a spouse for the whole of 2015–16 when you work out your MLS income.

See Medicare levy surcharge if you did not fit into any of the categories in table 1 above and:

• you were single for part of the year
• you were widowed during the year
• you became or ceased to be a sole parent
• you or any of your dependants were covered for only part of the year, or
• you are an overseas visitor with health cover.

Completing this section

Note: If you are an overseas visitor, for more information and instructions on how to complete the Medicare levy surcharge and this section, see Overseas visitors.

1. Answer the question Were you and all of your dependants covered by an appropriate level of private patient hospital cover from 1 July 2015 to 30 June 2016?
   If Yes, go to the Private health insurance section.
   If No, go to step 2.
2. If your income for MLS purposes is below the threshold for your circumstance, as outlined in the table 1, myTax may advise you that you do not have to pay the Medicare levy surcharge.
   Otherwise, work out the Number of days you do not have to pay the surcharge.
   
   If you do not have to pay MLS for any days during the period 1 July 2015 to 30 June 2016, enter 366.
   
   If you have to pay the surcharge for:
   • the whole period 1 July 2015 to 30 June 2016, enter 0
   • part of the period 1 July 2015 to 30 June 2016, enter the number of days for which you do not have to pay the surcharge.
    
3. If you had private patient hospital cover for any part of the year, go to the Private health insurance section.

Instructions on completing your individual tax return using myTax.