What is the difference between the Medicare levy and the Medicare levy surcharge?

‍What is the Medicare levy?

The Medicare levy is a tax that helps fund Australia's public healthcare system, providing essential medical services and hospital care to its citizens. The Medicare levy is charged 2% of a person's taxable income for all Australian residents except if you are:

• A low-income earner (earns equal to or less than $24,276)
• A temporary visa holder (Not entitled to Medicare benefits)
• A dependant (spouse or child)
• You are not eligible for the Medicare levy reduction but you have a dependant AND your family taxable income is less than $40,939

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Your Medicare levy can be reduced if you are:

• An individual who earns more than $24,276 but less than $30,345
• You are not eligible for the Medicare levy reduction AND your family income tax is more than $40,939 but less than $51,174

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What is the Medicare levy surcharge?

The Medicare levy surcharge is not to be confused with the regular Medicare levy.

Only individuals who earn over $90,000 and families who earn over $180,000 will pay the Medicare levy surcharge.

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The Medicare levy surcharge is designed to encourage people to take up private health insurance and, therefore take some burden off the public health system.

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To find out how much you need to pay for the Medicare levy, refer to Is private health insurance in Australia worth the tax benefit?

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Medicare Levy Surcharge Exemption for having a spouse

If you had a spouse for the full year, you do not have to pay the Medicare levy surcharge if your family taxable income exceeds $180,000 but your own income for MLS purposes* was $23,365 or less.

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If you had a new spouse or separated from your spouse, during the year, you may be liable for MLS for the number of days you were single or had a spouse.

‍ _{*Taxable income + fringe benefits + investment/property loss + reportable super contributions}

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For advice on Tax, BAS, GST, Bookkeeping, and Payroll issues visit us at ctkaccounting.com.au

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