Medicare gives Australian residents access to health care. It is partly funded by the Medicare levy, which is 2% of your taxable income. You pay a Medicare levy in addition to the tax you pay on your taxable income.
You may get a reduction or exemption from paying the Medicare levy. Your Medicare levy is reduced if your taxable income is below a certain threshold. In some cases, you may not have to pay this levy at all. The reduction or exemption will be determined from the information that you provide in your tax return.
In addition to the Medicare levy, you may also have to pay the Medicare levy surcharge (MLS) if you don’t have an appropriate level of private patient hospital cover.
If you have an appropriate level of private patient hospital cover, you won't have to pay the MLS, and depending on your income, you may be eligible for the private health insurance rebate. This rebate is an amount the government contributes towards the cost of your private hospital insurance premiums.
You may be entitled to an exemption from MLS for part or full year. This will be determined from the information that you provide in your tax return.
Depending on your circumstances, the Medicare levy, the MLS or variations to your private health insurance rebate may impact the refund you receive or the tax you owe.
If the MLS has resulted in you owing tax, you can take steps to avoid a liability in the future by:
