Private ruling: Medicare levy surcharge
Date of advice: 21 December 2017
Published: May 2018
Ruling period: Year ending 30 June 2017
Date scheme commenced: 1 July 2016

Ruling: Q1: Are you exempt from paying the Medicare levy surcharge? | A1: No.

Relevant facts and circumstances: You are single with no dependents. Your taxable income is $X. Your calculation of tax payable includes an amount for Medicare levy surcharge (MLS) of $X. You have continued to hold ancillary cover via a health fund. You do not have private patient hospital cover. You are unable to obtain hospital cover from any private health insurance provider due to a terminal illness. You are not a prescribed person for MLS proposes but request that the Commissioner exempt you from payment of the MLS as you are unable to obtain private patient hospital cover due to your terminal illness.

Relevant legislative provisions: Medicare Levy Act 1986 Section 8D | Medicare Levy Act 1986 Subsection 3(5) | Income Tax Assessment Act 1936 Section 251U

Reasons for decision: Summary: Under section 8D of the Medicare Levy Act 1986 (MLA 1986), a single taxpayer is liable to pay a surcharge of one per cent on his and her taxable income if: ● their taxable income exceeds the Medicare surcharge threshold, ● they are not a prescribed person as defined in section 251U of the Income Tax Assessment Act 1936 , and ● you do not have an insurance policy providing private patient hospital cover. Liability to the Medicare levy surcharge is based on whether you are single, a single person with dependants, or have a spouse or spouse with dependants. A single person with no dependents is liable to surcharge of 1% if their taxable income and reportable fringe benefits is between $90,001 and $105,000. You are a single person with no dependants with a taxable income of $X. The rate of MLS applicable to your situation is 1% of taxable income. This is confirmed by your own calculation. Section 251U of the Income Tax Assessment Act 1936 states that a prescribed person is: 1. a person entitled to full free medical treatment as a member of the Defence forces or as a relative of, or as a person otherwise associated with, a Defence force member. 2. a person entitled under veteran's entitlement (repatriation) legislation to full free medical treatment. 3. a blind pensioner or a sickness allowance recipient. 4. a person who is not a resident of Australia for tax purposes, or a person who is a resident of Norfolk Island. 5. a person who is attached to a diplomatic mission or consular post established in Australia or a household member of the person's family, provided the person is not an Australian citizen and is not ordinarily resident in Australia. 6. a person who has a certificate from the Levy Exemption Certification Unit showing that they are not entitled to Medicare benefits. You are not a prescribe person under any of these categories. Subsection 3(5) of the MLA 1986 states that a person is covered by an insurance policy that provides private patient hospital cover if the policy is a complying health insurance policy (within the meaning of the Private Health Insurance Act 2007 ) that covers hospital treatment. You do not have appropriate private patient hospital cover as required under section 8D of the MLA 1986. The legislation has no provision to allow the Commissioner to waive the Medicare levy surcharge or to provide exemption from it in your case. Accordingly, you will be liable for Medicare levy surcharge as your taxable income exceeds the surcharge threshold.