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Medicare levy surcharge exemption
If you fit in one of the following categories, you are exempt from MLS for the whole of 2023-24.
Surcharge exemption categories
Your spouse shows a lump sum payment in arrears on the supplementary section of their tax return.
If you are liable for MLS only because your spouse has shown a lump sum payment in arrears at item 20 Foreign source income and foreign assets or property or question 24 Other income in the supplementary section of their tax return, you may be entitled to a tax offset up to the amount of MLS you have to pay. We will calculate the tax offset for you.
You will need to provide additional information. Print Schedule of additional information – Item M2 on the top of a separate piece of paper. Print your name, address, tax file number and the name and address of your spouse. Explain that your spouse received a lump sum payment in arrears. Attach your schedule to your tax return. Print X in the Yes box at Taxpayer’s declaration question 2.
Which income threshold do you use if, during the year, you had a new spouse or separated from your spouse, or you became or ceased to be a sole parent?
If you had a new spouse or you separated from your spouse, or you became or ceased to be a sole parent, both the single and the family surcharge thresholds may apply to you for different periods.
You need to work out whether you were liable for MLS for any period during 2023–24 that you:
If your spouse died during 2023–24 and you did not have another spouse before the end of the year, you are treated as if you had a spouse for the remainder of 2023-24 and you apply the family surcharge threshold of $186,000, plus $1,500 for each dependent child after the first.
If your income for MLS purposes (or if you have a spouse, your combined income for MLS purposes) was above the relevant surcharge threshold that applies to you, and you and all of your dependents (including your spouse, if any) did not have an appropriate level of private patient hospital cover, or were not in a Medicare levy exemption category for the whole year, then you may be liable for MLS.
To help you work out whether you were liable for MLS for the different periods, see the examples.
Example: Spouse for the first part of the year
Michael and Michelle lived together as a couple on a genuine domestic basis for seven years, but on 12 October 2023 they separated and each stayed single. They did not have private patient hospital cover at any time during 2023-24.
Michelle and Michael had no dependent children, but they were dependants of each other for MLS purposes until they separated.
Michael’s income for MLS purposes was $69,000 and Michelle’s was $95,000. In previous years, they had used their combined income to assess their MLS liability. They now have to use their individual income for MLS purposes.
Michael and Michelle are considered to be a family for the period 1 July to 12 October 2023 (104 days), so the family MLS threshold of $186,000 applies to each of them for that period. This means:
Michael and Michelle were single for the period 13 October 2023 to 30 June 2024, so the single person MLS threshold of $90,000 applies for that period:
Michelle and Michael complete their tax returns at A item M2 by writing the number of days that they were not liable for MLS in 2017–18:
Example: Spouse for the second part of the year
At the beginning of the income year Alice and Adam were both single. Alice and Adam got married on 17 January 2024 and are still married on 30 June 2024. They did not have private patient hospital cover at any time during 2023-24.
Alice and Adam had no dependent children, but they were dependants of each other for MLS purposes from the date they were married.
Alice’s income for MLS purposes was $133,000 (including a net investment loss of $8,000) and Adam’s income for MLS purposes was $80,000.
Alice and Adam were single for the period 1 July 2023 to 16 January 2024 (200 days), so the single person MLS threshold of $93,000 applies to each of them for that period. This means:
Alice and Adam are considered to be a family for the period 17 January to 30 June 2024 (165 days), so the family MLS threshold of $186,000 applies to each of them for that period. This means:
Alice and Adam complete their tax returns at A item M2 by writing the number of days that they were not liable for MLS in 2023-24:
Alice and Adam’s combined income for MLS purposes is $213,000, which is above the family tier 2 earner threshold ($216,000). This means that any surcharge levied on either Alice or Adam is at the rate of 1.25%. Therefore, Alice’s Medicare levy surcharge for the first part of the year is calculated as follows:
$125,000 × 1.25% × (200÷365) = $856.16
What if you were covered by an appropriate level of private patient hospital cover for only part of the year?
If you were single and took out private patient hospital cover during the year use the following example to help you work out how many days you are liable to pay MLS.
Example: Part-year private patient hospital cover
In 2023–24, Jacinta was single and had no dependants. She had income for MLS purposes of $95,000. She was not in a Medicare levy exemption category at any time during the year.
Jacinta took out private patient hospital cover on 15 January 2024. Because Jacinta’s income for MLS purposes was above the single surcharge threshold of $93,000 and she did not have private patient hospital cover for the full year, she will have to pay MLS for the part of the year that she did not have private patient hospital cover.
Jacinta will not have to pay MLS for the time she had private patient hospital cover, that is, 15 January 2024 to 30 June 2024 (167 days).
Jacinta will write the number of days in 2023-24 that she is not liable for MLS (167) at A item M2 on her tax return and complete Private health insurance policy details on page 7 of her tax return.
Family covered for part of the year
If some members of your family were covered by private patient hospital cover for the whole year and other members of your family had cover for only part of the year, use the following example to help you work out how many days you are liable to pay MLS.
Example: Part-year liability
Jill and Kevin have been married for a number of years. They have three dependent children. Jill, Kevin and their children were not in a Medicare levy exemption category at any time during the year. Jill and the children were covered by private patient hospital cover for the full income year. Kevin had his name added to the policy on 10 January 2024.
Jill and Kevin had a combined income for MLS purposes of $190,000. The family surcharge threshold for Jill and Kevin is $186,000 (that is, $183,000 plus 2 × $1,500). Because not everyone was covered for the period 1 July 2023 to 9 January 2024 and their combined income for MLS purposes exceeds the family surcharge threshold, Jill and Kevin are both liable for MLS for this period (193 days). Jill and Kevin would both write the number of days that they were not liable for MLS (172) at A item M2 on their tax returns and complete Private health insurance policy details of their tax returns.