What is the Medicare Levy?
The Medicare levy helps fund some of the costs of Australia’s public health system known as Medicare. It is an amount you pay in addition to the tax you pay on your taxable income. The Medicare levy is 2% of your taxable income. We calculate your Medicare levy when you lodge your income tax return. Generally, the pay as you go amount your employer withholds from your salary or wages includes an amount to cover the Medicare levy.
Additional to the Medicare Levy, the Medicare Levy Surcharge (MLS) is a levy paid by Australian tax payers who do not have private hospital cover and who earn above a certain income. The surcharge aims to encourage individuals to take out private hospital cover, and where possible, to use the private system to reduce the demand on the public Medicare system.
The Medicare surcharge covers you and your dependents. Your dependents include:
- your spouse;
- any of your children who are under 21 years of age; or
- any of your full-time student children who are under 25 years of age.
Currently, you have to pay the surcharge if you are:
- a single person with an annual taxable income for MLS purposes greater than $90,000; or
- a family or couple with a combined taxable income for MLS purposes greater than $180,000. The family income threshold increases by $1,500 for each dependent child after the first;
and do not have an approved hospital cover with a registered health insurer.
Once you surpass the income thresholds listed above the MLS income threshold and rates from 2014-15 to 2022-23 are:
The family income threshold is increased by $1,500 for each MLS dependent child after the first child.
If you have any questions related to the Medicare levy or any other tax related matter, please get in contact with us at STS Accounting.
