Medicare Levy Surcharge

IN THIS ARTICLE

• When you pay the Medicare levy surcharge
• How much Medicare levy surcharge you will pay
• Medicare levy surcharge if you had a spouse
• Change in circumstances during the year
• Spouse (married or de facto) for MLS purposes
• Child for MLS purposes
• When you pay the MLS
• Income for Medicare levy surcharge purposes
• Medicare levy surcharge income, thresholds and rates

Paying the Medicare levy surcharge

Find out when you have to pay the Medicare levy surcharge (MLS) and how much you will pay.

A. When you pay the Medicare levy surcharge

If you have to pay the Medicare levy, you may have to pay the Medicare levy surcharge (MLS) if both:

• you, your spouse and your dependent children do not have an appropriate level of private patient hospital cover
• you earn above a certain income.

The MLS is an amount you pay on top of the Medicare levy.

If you’ve paid the MLS and you want to avoid paying it in the future, you can take out the appropriate level of private patient hospital cover for yourself, your spouse and all your dependants.

B. How much Medicare levy surcharge you will pay

The Medicare levy surcharge (MLS) rate of 1%, 1.25% or 1.5% is levied on:

• your taxable income
• total reportable fringe benefits, and
• any amount on which family trust distribution tax has been paid.

The ATO uses a special definition of income (called income for MLS purposes) to work out if you have to pay the MLS and the rate you will pay. This income is different from your taxable income.

You will not pay the MLS if your income is less than the base income threshold, which is:

• $90,000 for singles
• $180,000 (plus $1,500 for each dependent child after the first one) for families.

You can use the Income tax estimator to work out your MLS.

C. Medicare levy surcharge if you had a spouse

If you had a spouse for the full year, you do not have to pay the MLS if:

• your family income exceeds the $180,000 (plus $1,500 for each dependent child after the first one), but
• your own income for MLS purposes was $23,365 or less.

If you had a new spouse, or you separated from your spouse, during the year:

• you may be liable for MLS for the number of days you were single – if your own income for MLS purposes was more than the single surcharge threshold of $90,000
• you may be liable for MLS for the number of days you had a spouse or dependent children – if your own income for MLS purposes was more than the family surcharge threshold of $180,000 (plus $1,500 for each dependent child after the first one).

The ATO will work out if you have to pay the MLS based on the information you provide in your tax return. We will include MLS with your Medicare levy. It will show as one amount on your notice of assessment, called Medicare levy and surcharge.

D. Change in circumstances during the year

If circumstances for yourself, your spouse or your dependent children change at any time during the year, you may become liable to pay the MLS.

Changes in circumstances may relate to your:

• income
• spouse
• dependants
• private health insurance

If you travel overseas and cancel your private patient hospital cover during that time, you may be liable to pay the Medicare levy surcharge (MLS).

Medicare levy surcharge income, thresholds and rates

Based on your income for MLS purposes, you can work out which income threshold and MLS rates apply to you.

A. Income for Medicare levy surcharge purposes

Income for Medicare levy surcharge (MLS) purposes is used to work out whether you have to pay the MLS and the rate you will pay.

If you have a spouse, we will use your combined income for MLS purposes.

Your income for MLS purposes is the sum of the following items for you (and your spouse, if you have one):

1. Taxable income

• include the net amount on which family trust distribution tax has been paid
• don’t include any assessable first home super saver (FHSS) released amount for the income year under the FHSS scheme.

2. Reportable fringe benefits.
3. Total net investment losses – the sum of

• net financial investment losses
• net rental property losses.

4. Reportable super contributions – the sum of

• reportable employer super contributions
• deductible personal super contributions.

5. If you have a spouse, their share of the net income of a trust on which the trustee must pay tax (under section 98 of the Income Tax Assessment Act 1936) and which has not been included in their taxable income.

If you had exempt foreign employment income, add it to your taxable income if your taxable income is $1 or more.

If you meet both of the following conditions, you can reduce income for MLS purposes by any taxed element of the super lump sum, other than a death benefit, that does not exceed your (or your spouse’s) low rate cap:

• you (or your spouse) are aged from your (or their) preservation age to under 60 years old
• you (or your spouse) received a super lump sum.

B. Income threshold and rates 2023–24

Once you determine your income for Medicare levy surcharge (MLS) purposes, you can use the MLS income threshold tables below to work out which MLS rate applies to you.

These income thresholds and MLS rates apply for the 2023–24 income year.

Use this information to work out which income threshold and MLS rate apply to you.

Note: The family income threshold is increased by $1,500 for each MLS dependent child after the first child.

MLS income thresholds and rates for 2023–24

C. Income threshold and rates from 2014–15 to 2022–23

These income thresholds and MLS rates apply for income years from 2014–15 to 2022–23.

Use this information to work out which income threshold and MLS rate apply to you.

Notes:

• The family income threshold is increased by $1,500 for each MLS dependent child after the first child.
• See Family and dependants for Medicare levy surcharge purposes for more information about what is considered family and dependant for the MLS.

MLS income thresholds and rates from 2014–15 to 2022–23