Medicare levy surcharge changes

As from the 1st July 2012 changes are being made to the Medicare Levy Surcharge and the Private Health Insurance Rebate.

The Medicare Levy Surcharge has always been a penalty for having a higher income and not having private health insurance. The levy now increases above the 1% of previous years to a new maximum of 1.5% if your income is greater than $130,000 for a single person and $260,000 for a family.

What has significantly changed is the Private Health Insurance Rebate, the Rebate was either received as a reduction to your Private Health Insurance premiums or as a rebate on your lodged tax return. The rebate depending on your age would have been a minimum amount of 30%. Income thresholds now apply to the rebate, if your income is greater than $130,000 for a single person and $260,000 for a family you will now long receive any rebate to reduce your private health insurance premiums.

Please follow the table below to see how your situation may have changed.

UnchangedTier 1Tier 2Tier 3
Singles

$84,000 or less

$84,001-97,000

$97,001-130,000

$130,001 or more

Families*

$168,000 or less

$168,001-194,000

$194,001-260,000

$260,001 or more

Rebate
Aged under 65

30%

20%

10%

0%

Aged 65-69

35%

25%

15%

0%

Aged 70 or over

40%

30%

20%

0%

Medicare levy surcharge
Rate

0.0%

1.0%

1.25%

1.5%

Your income for surcharge purposes includes your:

  • taxable income (including the net amount on which family trust distribution tax has been paid)
  • exempt foreign employment income if your taxable income is $1 or more
  • reportable fringe benefits amount, as reported on the payment summary
  • total net investment loss (includes both net financial investment loss and net rental property loss)
  • reportable super contributions (includes both reportable employer super contributions and deductible personal super contributions).