The impact of the Medicare levy surcharge: how to structure private health to reduce it
The Australian healthcare system is funded through a blend of public and private tax contributions and is managed by Medicare. The authority aims to ensure that all permanent residents and citizens receive essential healthcare. However, some Aussies are bound to pay an additional cost based on their income profiles and status. Medicare Levy Surcharge, or MLS, is one of the costs designed to encourage private health insurance. This post by Medicare Levy Surcharge Accountants Melbourne sheds light on who the MLS applies to and is computed. So, let’s have a look at how you can avoid this surcharge tax.
An Overview of Medicare Levy Surcharge
It’s an additional tax imposed on individuals who earn above a certain income threshold and have no private health insurance. This tax aims at encouraging higher-income earners to get private insurance. Thus, it can help with burden reduction on public healthcare. Private healthcare insurance enables individuals to rely less on government hospitals and diminishes waiting times. Well, most individuals often feel muddled by assuming the medicare levy and surcharge as the same term. But it is not, since the medicare levy applies to most taxpayers and MLS has specific criteria. Thus, Tax Accountants for MLS in Melbourne assess the right eligibility and compute tax precisely.
Categories of Taxpayers Liable to Pay MLS
MLS targets the high-income group of earners who are monetary capable of accessing private healthcare. Hence, those who don’t have private medical cover are liable to pay regardless of individuals or families. However, income thresholds for this surcharge are assessed based on total income. It may cover varying forms of income such as fringe benefits, rental, and property investment. Also, if you have a higher income, you have to pay a higher surcharge.
Exceptions from the Medicare Levy Surcharge
Well, not everyone is liable to pay MLS as an obligatory tax even if they have a high income. So, if you want to do MLS Tax Planning Melbourne, you can seek an exemption by:
- Having a Valid Private Healthcare Policy
- Evaluating Certain Tax Deductions & Allowances
- Confirming your Eligibility for Full Medicare Exemption
Computing MLS with Accuracy to Meet ATO Compliance
Melbourne Medical Levy Surcharge Accountants compute MLS as per the income of individuals. Also, the number of dependents on primary earners is considered with varying surcharge rates. For instance, if you earn 120000 AUD per year, you are subject to a surcharge of 1.25% of taxable income. If your income is getting beyond the threshold, a reliable way to avoid the MLS is having private healthcare cover. Remember, the policy must meet minimum standards of hospital cover. You may also need to have family health insurance to get coverage for all family members.
Consult Kirpa Tax for Melbourne MLS Tax Planning
MLS is an important aspect of the Australian healthcare system, which encourages high-income earners to get private medical cover. But navigating its intricacies is quite confusing. So, consult us to have a proper understanding of income thresholds and surcharge rates for MLS.
FAQ’s
What is the medicare levy in Melbourne, Australia?
Medical Levy funds the Australian Healthcare System and is charged at 2% of taxable income. But if you have a higher income and no private healthcare, you should pay MLS.
Who is liable to pay the medicare levy surcharge?
Medicare Levy Surcharge Accountants Melbourne help you to know if you are accountable to pay. If you earn above a certain amount and don’t have health cover, you are liable.
What are the income thresholds for MLS eligibility?
If you are earning 93k in a year as an individual or have 186k AUD income in a year. For every child after the first one, the threshold increases by 1500 AUD.
How much surcharge is levied on the medicare levy?
Tax Accountants for MLS in Melbourne know surcharge rates which are 1, 1.25, and 1.50. Kirpa Tax computes the rate as per set income thresholds for individuals and family earners.
What is the best way to avoid the Medicare Levy Surcharge?
The best way to avoid it is to have private healthcare cover from a registered insurer. If you have dependents, you must ensure that they have healthcare coverage.
What is referred to as approved healthcare cover?
You should get the policy from a registered health insurance agent or company. Your healthcare insurance must cover some or all of the charges of private hospital stays.
Why should I consult with professionals regarding MLS?
Consult Kirpa Tax for MLS Tax Planning Melbourne to know exemptions and rates of surcharge. We can help you make informed decisions about managing your finances.