Private ruling: Medicare levy
Published: January 2014
Ruling period: Year ended 30 June 2001 | Year ended 30 June 2002 | Year ended 30 June 2003 | Year ended 30 June 2004 | Year ended 30 June 2005 | Year ended 30 June 2006 | Year ended 30 June 2007 | Year ended 30 June 2008 | Year ended 30 June 2009 | Year ended 30 June 2010 | Year ended 30 June 2011 | Year ended 30 June 2012 | Year ended 30 June 2013
Date scheme commenced: 1 July 2000

Ruling: Q1: Are your grandchildren considered to be your dependants for the purposes of calculating your liability for Medicare levy? | A1: Yes.

Relevant facts and circumstances: You are the primary carer of your grandchildren. The Court ordered that your grandchildren live with you. You receive no financial support for your grandchildren from their parents. One parent is a resident of another country and the whereabouts of the other is unknown. You have had care of your grandchildren for many years. You received benefits from Centrelink who recognise your grandchildren as your dependants.

Relevant legislative provisions: Income Tax Assessment Act 1936 Section 159R | Income Tax Assessment Act 1997 Section 995-1

Reasons for decision: Summary: Your grandchildren are considered to be your dependants for the purposes of determining your liability to Medicare levy. | Detailed Reasoning - Detailed reasoning: An individual who is a resident of Australia at any time during the financial year is liable to pay a Medicare levy based on their taxable income for the year. The legislation governing the levy is contained in sections 251R to 251Y of the Income Tax Assessment Act 1936 (ITAA 1936) and in the Medicare Levy Act 1986 . Medicare levy is payable where the individual's taxable income exceeds a set amount ('the threshold'). Where the individual has dependants the amount of the threshold is increased to take into account the individual's responsibilities for the dependants. This results in a lower Medicare levy being payable to that paid by an individual without dependants who has the same taxable income. Currently, subsection 251R(3) of the ITAA 1936 deems a person to be a dependant of another individual if the first mentioned person was: · your spouse · your child aged less than 21 years, or · your child, aged between 21 years and 24 years, who was a full-time student. Prior to 1 July 2005, a dependant was defined as: · your spouse · your child aged less than 16 years, or · your child, aged between 16 years and 24 years, who was a full-time student. The term 'child' is defined in section 995-1 of the Income Tax Assessment Act 1997 to include: · your adopted child, stepchild or ex-nuptial child · a child of your spouse, and · someone who is your child within the meaning of the Family Law Act 1975 , for example, where a parenting order has been given giving you legal responsibility for the child. In your situation, the Court requires your grandchildren to reside with you. You provide full care and support, both emotionally and financially. Additionally, Centrelink recognises your grandchildren as your dependants. Whilst it is not free from doubt, given your circumstances, it considered that your grandchildren are your dependants for the purposes of determining your liability to Medicare levy.