We may have heard the expression, “health is wealth”, but sadly, some people don’t take it to heart, realising it is true only when the hospital bills pile up. Your health is of the utmost importance. We cannot work if we are sick and, obviously, our income will be affected. The good thing is, in Australia, we have the Medicare levy. This is the amount paid by taxpayers – two percent of their taxable income – to partially fund Medicare that gives us access to healthcare.
How can you be exempted from paying?
You don’t have to pay if you are a foreign resident of Australia and you’ve met certain medical requirements.
What is Medicare Levy? Here are some things worth-knowing about the Medicare levy:
- As a taxpayer, your Medicare levy is reduced if your taxable income is below the threshold specified.
- There are instances when you may not need to pay Medicare levy.
- Aside from the Medicare levy, you may need to pay the Medicare Levy Surcharge (MLS) if you do not have a private hospital health insurance. This depends on your income, which also dictates whether or not you are eligible for a rebate of your private health insurance. The rebate refers to the amount that is contributed by the government for the cost of the premiums of your private hospital health insurance.
- You can check your income tax return to know the Medicare levy, MLS, and any other reductions. You may also use an income tax calculator to give you an idea of the amount of Medicare levy that you need to pay. Bear in mind that the Medicare levy, MLS or any other variations to your private health insurance rebate may affect your refund or the tax that you need to pay.
- What if the Medicare levy surcharge resulted in you having to pay tax? You can avoid a liability moving forward by reviewing your rebate and taking out a level of private hospital insurance.
- How can you be exempted from paying the Medicare levy? You don’t have to pay if you are a foreign resident of Australia and you’ve met certain medical requirements. If you are not entitled to Medicare benefits, you may be exempted from paying Medicare levy.
- For those who have a low income, the Medicare levy will be reduced, if their taxable income is below a certain threshold.
- If your taxable income is higher than a certain threshold, you may still be able to reduce your Medicare levy depending on the taxable income of your family.
Do you have other ideas when it comes to Medicare levy and income tax in Australia? Share your insights in the comments section.