Private ruling: Medicare levy surcharge exemption
Published: January 2013
Ruling period: Year ended 30 June 2011 | Year ended 30 June 2012
Date scheme commenced: 1 July 2010

Ruling: Q1: Are you eligible for a Medicare levy surcharge exemption? | A1: Yes.

Relevant facts and circumstances: You are a resident of Australia for taxation purposes. You are a prescribed person for Medicare levy purposes as you receive a disability support pension from Centrelink. Your condition is permanent. Your taxable income exceeds the individual threshold for the Medicare levy surcharge. You did not have private hospital cover insurance for the relevant year and were only partly covered during the subsequent year. You are married and your spouse had private hospital cover for the relevant year and the subsequent financial year. You and your spouse have no children. Your spouse had taxable incomes which made them liable to pay the Medicare levy.

Relevant legislative provisions: Income Tax Assessment Act 1936 Paragraph 251S(1)(a), | Income Tax Assessment Act 1936 Paragraph 251U(1)(a), | Medicare Levy Act 1986 Section 3A and | Medicare Levy Act 1986 Section 8D.

Reasons for decision: Summary: A liability for the Medicare Levy Surcharge (MLS) generally arises where a person, or any of their dependants, does not have the required private patient hospital cover and the person's taxable income exceeds the threshold amount. Where the person is regarded as a member of a family, the 'family surcharge threshold' amount applies. In accordance with section 8D of the Medicare Levy Act 1986 (MLA 1986), a surcharge of 1 per cent of the person's taxable income, which includes reportable fringe benefits amounts, is payable in addition to the amount of Medicare levy otherwise payable where a person satisfies all of the following tests for the whole of the income year: · the person or at least one of the person's dependants is not covered by an insurance policy that provides private patient hospital cover (and that dependant was not a prescribed person); · the person is not, or is taken not to be, a prescribed person; · the combined taxable incomes of the person and the person's spouse exceeds the family surcharge threshold; and · the person's taxable income exceeds the Medicare levy surcharge level for the relevant financial year. Section 251U of the Income Tax Assessment Act 1936 (ITAA 1936) defines prescribed persons to include taxpayers receiving a specific pension or sickness allowance from Centrelink; For Medicare levy surcharge purposes if you are a prescribed person and your dependants were also in a Medicare levy exemption category and/ or held their own private patient hospital cover you will be exempt from the Medicare levy surcharge. As you are in receipt of a blind pension from Centrelink and are therefore a prescribed person and your only dependant was covered by their own private patient hospital cover you are exempt from the Medicare levy surcharge.

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