Private ruling: Medicare levy surcharge
Date of advice: 3 March 2026
Published: 28 April 2026
Ruling period: Year ended 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Does your health insurance policy qualify as a complying health insurance policy for Medicare levy surcharge purposes? | A1: No. | Q2: Are you entitled to an exemption for the Medicare levy surcharge? | A2: No. | Q3: Can the Commissioner remit or reduce the Medicare levy surcharge imposed? | A3: No.

Relevant facts and circumstances: You have a health insurance policy. You have had this policy for a number of years.

Relevant legislative provisions: Income Tax Assessment Act 1997 subsection 995-1(1) | Medicare Levy Act 1986 subsection 3(5) | Medicare Levy Act 1986 sections 8B to 8G

Reasons for decision: Summary: Medicare Levy Surcharge (MLS) Subsection 3(5) of the MLA 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 (PHIA 2007)) that covers hospital treatment, and any excess payable in respect of benefits under the policy is no more than $1,000 in any 12 month period, for policies that cover more than one person. This policy is not a complying health insurance policy within the meaning of the PHIA 2007 and does not satisfy the requirement of subsection 3(5) of the MLA. While we accept that you have private patient hospital cover with your insurance, your policy is not a complying policy for MLS purposes. That is, your health cover is not provided by an insurance policy issued by a registered health insurer for hospital treatment in Australia. Where a person does not have private patient hospital cover with a complying fund, they are liable to pay an additional Medicare levy surcharge if their income, for Medicare levy surcharge purposes, exceeds the relevant threshold. Income for Medicare levy surcharge purposes is defined in subsection 995-1(1) of the Income Tax Assessment Act 1997 . The income for surcharge purposes is the sum of: • your taxable income • your reportable fringe benefits • your reportable superannuation contributions • your net investment loss less any taxed element of a superannuation lump sum for which the tax rate is zero. Where your income for MLS purposes exceeds the relevant threshold, then you are liable to pay the MLS. Whether the Commissioner has any discretion in relation to the imposition of the Medicare levy surcharge was discussed in McCarthy v FC of T 2002 ATC 2204. The Administrative Appeals Tribunal (AAT) held that the Commissioner has no power to remit the Medicare levy surcharge imposed on a taxpayer. The taxpayer argued that the imposition of the surcharge was unfair. The AAT held that the Commissioner had no choice but to impose the levy. The clear wording of the MLA 1986 required the surcharge to be imposed. Furthermore, the legislation did not include the discretion to waive or modify the surcharge in cases of hardship or other special circumstances, and therefore the surcharge was payable. We acknowledge your specific circumstances, however, the legislation has no provision to remit or reduce the Medicare levy surcharge. There are no exemptions that apply to your specific circumstances, therefore you are liable for the MLS. The Commissioner has no discretion to exempt you from the MLS.