Private ruling: Private health insurance rebate
Published: December 2013
Ruling period: Year ended 30 June 2013
Date scheme commenced: 1 July 2012

Ruling: Q1: Are you entitled to a private health insurance reduction in the year ended 30 June 2013? | A1: No.

Relevant facts and circumstances: This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling. You and your spouse are Australian residents. You and your spouse are under 65 years of age. You hold a couples complying private health insurance policy. Your taxable income was more than $260,001 in the 2012-13 financial year. You pay health insurance premiums annually. You received a premium reduction of 30% up front with your private health insurance fund and this amounted to a premium reduction. You received your notice of assessment for the year ended 30 June 2013. The notice of assessment included as a liability an amount for 'Excess private health reduction or refund (rebate reduced)'.

Relevant legislative provisions: Income Tax Assessment Act 1936 Section 159P. | Income Tax Assessment Act 1997 Section 4-15. | Income Tax Assessment Act 1997 Section 6-5. | Income Tax Assessment Act 1997 Section 8-1. | Income Tax Assessment Act 1997 Division 36. | Income Tax Assessment Act 1997 Subdivision 61-G. | Income Tax Assessment Act 1997 Section 995-1. | Private Health Insurance Act 2007 Section 22-5. | Private Health Insurance Act 2007 Section 22-10. | Private Health Insurance Act 2007 Section 22-15. | Private Health Insurance Act 2007 Section 22-30. | Private Health Insurance Act 2007 Section 22-35. | Private Health Insurance Act 2007 Section 22-40. | Private Health Insurance Act 2007 Subdivision 282-AA. | Private Health Insurance Act 2007 Section 282-16. | Private Health Insurance Act 2007 Section 282-18.

Reasons for decision: Summary: You are not entitled to a private health insurance tax rebate in the year ended 30 June 2013 because your income for surcharge purposes is above the private health insurance family income tier 3 threshold. | Detailed Reasoning - Detailed reasoning: Your entitlement to a private health insurance tax rebate in the year ended 30 June 2013 is income tested. If you earn too much income for surcharge purposes, you are not eligible to receive a private health insurance tax rebate. The Private health insurance family thresholds are defined in Section 22-30 of the PHIA 2007 and are subject to indexing each year per section 22-45 of the PHIA 2007. In the 2012-13 financial year, the following income tiers will apply for families (a family being a couple with or without children) when calculating the amount of private health insurance rebate you are entitled to: Family combined income Amount of rebate Less than $168,000 30% $168,001 - $194,000 (Tier 1) 20% $194,001 - $260,000 (Tier 2) 10% $260,001 and above (Tier 3) 0% (the income thresholds are raised by $1,500 for each child after the first child). These thresholds apply for all premium payments made after 1 July 2012. For the year ended 30 June 2013, the family tier 3 threshold is $260,001. As your combined income for surcharge purposes (income for surcharge purposes is what is used to calculate the family income for PHIR purposes and is defined in Section 995-1 of the ITAA 1997) is above this threshold you are not entitled to any private health insurance tax rebate. Subdivision 282-AA of the PHIA 2007 gives the Australian Taxation Office (ATO) authority to administer and recover any liability for excess private health insurance reduction. In your circumstances an amount has been correctly recovered by the ATO.