Private ruling: Medicare levy surcharge - overseas insurer
Date of advice: 21 May 2020
Published: June 2020
Ruling period: Year ended 30 June 2018 | Year ended 30 June 2019 | Year ending 30 June 2020 | Year ending 30 June 2021 | Year ending 30 June 2022 | Year ending 30 June 2023 | Year ending 30 June 2024
Date scheme commenced: 1 January 2017

Ruling: Q1: Are you exempt from paying the Medicare levy surcharge (MLS) until late 20XX because you currently have an international health insurance policy, that covers all the requirements of an Australian policy that would exempt you from the MLS, which insures you till this date? | A1: No

Relevant facts and circumstances: You are an Australian permanent resident. You currently have a top-level, worldwide health insurance policy that covers you both in Australia and internationally. The policy is with an overseas insurance company and was taken out overseas. The level of cover is well beyond any of the health insurance policies offered in Australia. There is no gap and there are no additional payments. You provided a letter from the overseas insurance company which advises the following: · The coverage is valid worldwide. · The insurance covers outpatient treatment, inpatient treatment, dental treatment and prescribed medication.

Relevant legislative provisions: Medicare Levy Act 1986

Reasons for decision: Summary: While these reasons are not part of the private ruling, we provide them to help you to understand how we reached our decision. You will not be exempt from paying the MLS because your international health insurance policy is not a complying health insurance policy. | Detailed Reasoning - Detailed reasoning: The MLS is imposed by the Medicare Levy Act 1986 (MLA). Sections 8B, 8C and 8D of the MLA state that if a person earns more than their relevant income threshold and is not covered by an insurance policy that provides private patient hospital cover, they will be liable to pay the MLS. Subsection 3(5) of the MLA states the following: For the purposes of this Act, 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. Your situation is similar to that of the taxpayer in Adam Fraser v. Commissioner of Taxation AATA 738. In that case Mr Fraser was a member of BUPA International. The Private Health Insurance Administration Council confirmed in this case that BUPA International is not on the Register of Health Benefit Organisations. An up to date record of all registered private health insurers providing complying policies can be found on the PrivateHealth.gov.au website. As your overseas provider is not on the list of registered health insurers, it cannot issue complying health insurance policies. As you are not covered by a complying health insurance policy, when your income for MLS purposes is greater than the threshold, you will be liable for the MLS. In the case of McCarthy v F C of T 2002 ATC 2004, the applicant applied for an exemption from the Medicare levy being imposed. It was determined that the Commissioner had no discretion to not impose the Medicare levy (or the MLS) as there was no provision in the legislation to do so. Once a taxpayer's income has reached the MLS threshold the surcharge must be imposed in accordance with the legislation. Your private health insurance provider is an overseas provider that is not registered in Australia. Consequently, your policy will not exempt you from paying the MLS.