If your client is claiming the Medicare levy exemption they will need to obtain a Medicare Entitlement Statement from Services Australia before lodging their tax return. They need to complete this form each year they wish to claim the exemption.
If your client does not qualify for an exemption, they will be subject to a Medicare levy of 2% of their taxable income. This applies regardless of whether or not they have private health insurance.
In addition to the Medicare levy, your client may have to pay the Medicare levy surcharge. This applies if their household income is above the relevant threshold and they do not have the appropriate private patient hospital cover for any period during the financial year.
Note: The net medical expenses tax offset was abolished from 1 July 2019.