Private ruling: Medicare levy exemption
Published: August 2014
Ruling period: Year ended 30 June 2014 | Year ended 30 June 2015
Date scheme commenced: 1 July 2013

Ruling: Q1: Are you entitled to a full Medicare levy exemption? | A1: No. | Q2: Are you entitled to a half Medicare levy exemption? | A2: Yes.

Relevant facts and circumstances: You have a Gold Card which covers you for all illnesses. Your spouse is not entitled to free medical treatment and they are not subject to Medicare levy on their income.

Relevant legislative provisions: Income Tax Assessment Act 1936 Section 251S | Income Tax Assessment Act 1936 Section 251T | Income Tax Assessment Act 1936 subsection 251U(1) | Income Tax Assessment Act 1936 subsection 251U(3)

Reasons for decision: Summary: Section 251S of the Income Tax Assessment Act 1936 (ITAA 1936) provides that a Medicare levy is payable by an individual who is a resident of Australia at any time during the income year based on their taxable income for the year. Section 251T of the ITAA 1936 provides for exemption from the levy to persons who qualify as prescribed persons. Prescribed persons are listed in subsection 251U(1) of the ITAA 1936 and includes a person entitled under veterans' entitlement (repatriation) legislation to full free medical treatment. Taxation Ruling TR 93/35 Income tax: Medicare levy payable by persons entitled to full free medical treatment: dependants for Medicare levy purposes clarifies the circumstances in which some persons, who would normally be exempt from the Medicare levy, are required to pay half the levy. Paragraph 3 states that the broad principle is that if a prescribed person: • does not have any dependants • has dependants who all qualify as exempt in their own right • has a dependant who is subject to the levy on a separate income • has a spouse who is liable to pay the levy, and the spouse contributes to the maintenance of a dependant then that prescribed person is completely exempt from the levy. If a prescribed person is not completely exempt from the levy in accordance with paragraph 3, then that prescribed person will be required to pay half the levy (subsection 251U(3) of the ITAA 1936). In your case, your Gold Card entitles you to full free medical treatment so you are a prescribed person. However, because your spouse does not qualify as exempt, in their own right, and is not liable to pay the levy in their own right, you are not completely exempt from the levy. Therefore, you are only eligible for a half exemption of the levy under section 251T of the ITAA 1936.