Document ID: chunk:federal_register_of_legislation:F2024L00664:clause:1_865:p4
Version: federal_register_of_legislation:F2024L00664
Segment Type: clause
Provision Reference: sch 1 cl 865 (pt 4/8)
Character Range: 19406–22058

levy adjustment

A Medicare levy adjustment is not allowed where withholding amounts have been calculated using Scales 1, 3, 4 or 5. The amount obtained using Scales 2 or 6 (after allowing for any tax offsets) is reduced by any amount of Medicare levy adjustment applicable.

When an employee is entitled to an adjustment

To claim the Medicare levy adjustment (available in certain situations), your employee must lodge a Medicare levy variation declaration with their Tax file number declaration.

Some employees may be liable for an increased rate of the Medicare levy surcharge as a result of the income for surcharge purposes tests. They can lodge a Medicare levy variation declaration, asking you to increase the amount to be withheld from their payments.

An employee who has lodged both a completed Tax file number declaration and a Medicare levy variation declaration may be entitled to a Medicare levy adjustment if they have weekly earnings of one of the following:
    * $500 or more where scale 2 is applied
    * $843 or more where scale 6 is applied.

To claim the adjustment, the employee must answer yes to question 10 and yes to question 9, and/or question 12 on the Medicare levy variation declaration.

Calculating the Medicare levy adjustment

To calculate the Medicare levy adjustment, your software package will need to be able to distinguish those employees who have answered yes to question 9 and no to question 12 on the Medicare levy variation declaration.

Where employees have answered yes to question 12, the software must be able to store the number of dependants shown at this question on the declaration.

You will need to calculate the weekly family threshold and shading out point (SOP) before calculating the weekly levy adjustment for employees with weekly earnings of one of the following:
    * $625 or more where Scale 2 is applied
    * $1,053 or more where Scale 6 is applied.

Values used in the calculations may be regarded as variables.

Weekly family threshold (WFT)

Where scale 2 or scale 6 is applied
    * Where an employee has answered yes to question 9 and no to question 12 on the Medicare levy variation declaration:
  WFT = $843.19 (43,846 ÷ 52) (rounded to the nearest cent).
    * Where an employee has answered yes to question 12 on the Medicare levy variation declaration, you need to:
      1. multiply the number of children shown at question 12 by 4,027 and add the result to 43,846
      2. divide the result of (a) by 52
      3. round the result of (b) to the nearest cent.
Example:
If the employee has shown two dependent children at question 12:
WFT = ([4,027 × 2] + 43,846) ÷ 52
WFT =