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How you can reduce your tax by not having to pay the Medicare Levy Surcharge

If you pay tax, you also pay the Government’s 1.5% Medicare Levy.

However, if you earn over a certain amount – and don’t have private hospital cover – you’ll also pay the Government a Medicare Levy Surcharge, which is another 1% on top of that again.

Income thresholds

If you’re single with an annual taxable income of $50,000
If you’re a couple or family with a combined annual taxable income of $100,000*

If you fall into one these categories, you can either:

Pay the extra tax each year; or
Join a Mutual Community hospital cover, which may actually cost less than the Medicare Levy Surcharge. Of course, by taking out private hospital cover, you’ll also have the added benefits of knowing that you and yours are covered.

Proposed changes to the Medicare Levy Surcharge

In the Federal Government's May 2008 Budget it was proposed that the taxable income threshold for the Medicare Levy Surcharge would increase to $100,000 for singles and $150,000 for couples and families*.

Until passed by Parliament, this proposal remains just that - a proposal - and Parliament is not likely to consider the legislation again until at least September 2008. Also, the proposal may change from what is outlined above, and it is not certain whether the effective date would be applied retrospectively or at a future date.

For the time being, $50,000 remains the threshold for singles and $100,000 the threshold for couples and families*.

Until there is certainty about what the changes will be and when they will be effective, there may be some risks associated with any decision to discontinue hospital cover:

The Medicare Levy Surcharge may have to be paid for any period you do not hold an appropriate level of hospital cover
Waiting periods may have to be re-served if you discontinue your hospital cover then want to re-instate it
Lifetime Health Cover is not affected by the proposed changes so anyone over 31 should consider the potential impacts of discontinuing hosital cover

Please be assured that as soon as we know more, we'll pass on the information.

Check out our Medicare Levy Surcharge calculator to see if you are impacted

Find out more about the Medicare Levy Surcharge

I know I am impacted, please show me all your covers

* The family threshold increases by $1,500 per child after the first child.