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Medicare Levy:

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The Medicare Levy is the way in which the Federal Government obtains the money to fund the Medicare scheme. In general terms, the purpose of Medicare is to provide general health care to Australian Residents. Currently, the majority of taxpayers pay the Medicare Levy which is set at a rate of 2.0% of the taxpayer’s income.

Reduction of the Medicare Levy for Low Income Earners

The amount of the Medicare Levy that you are required to pay may be reduced if your income is below a certain level, and in certain circumstances you may not be required to pay the Medicare Levy at all. The income threshold for senior citizens at which you are required to pay the Medicare Levy is higher than the normal income threshold. Where your personal income is above the income threshold, you may be able to receive a reduction in the Medicare Levy that you are required to pay if your combined family income is under the relevant threshold.

Exemption from paying the Medicare Levy

Broadly speaking, people living in Australia who are eligible for the Medicare scheme, are required to pay the Medicare levy for each financial year as part of their annual income tax return.

If you are living in Australia, but you are not eligible for the benefits of the Medicare scheme during all, or part of, any financial year, you may be able to claim an exemption from paying the Medicare levy. If you wish to claim an exemption from paying the Medicare Levy as part of your annual tax return, you must apply for a Medicare Levy Exemption Certificate.

You may not be eligible for the exemption if you:

  • Hold a permanent resident visa or have applied for a permanent resident visa;
  • Were a resident of the United Kingdom, the Republic of Ireland, Italy, Malta, Sweden, the Netherlands, Finland, Belgium, New Zealand, Norway or Slovenia before entering Australia;
  • Maintain a dependant or another person who was eligible for Medicare; and
  • Are an Australian citizen living overseas for less than five years.

Generally speaking, the Medicare Levy is a relatively simple part of the Australian taxation system. However, tax issues with the simplest parts of the tax system can arise. As a tax law firm in Sydney, Navado Lawyers and Solicitors has a team of experienced tax lawyers who possess a broad and detailed understanding of the taxation system. If you would like to speak to one of our tax lawyers about the effect of the Medicare Levy on your income, you can contact our firm and arrange a consultation. Please call (02) 9233 4048 or send an email to info@navado.com.au to book.

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