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Private health insurance rebate & Medicare levy surcharge Individuals and families on incomes above the Medicare levy surcharge thresholds, who do not have an appropriate level of private patient hospital cover, may be required to pay Medicare levy surcharge for any period during the year that they did not have this cover. Medicare levy surcharge is in addition to the 1.5% Medicare levy.
Private health insurance rebate is an amount that the government contributes towards the cost of your private health insurance premiums. From 1 July 2012, your eligibility to a private health insurance rebate will depend on your income for surcharge purposes. You can either receive this rebate up-front through a reduction in the cost of your premiums from your insurer or in the form of a rebate when you lodge your tax return.
The private health insurance rebate and Medicare levy surcharge have been subject to income testing against new income for surcharge thresholds since 1 July 2012.
There is no change to increases for additional dependent children after the first or exemptions that may apply to your circumstances.
Income for surcharge purposes is not the same as your taxable income. For example your income for surcharge purposes would also include:
• Reportable fringe benefits, as reported on your payment summary
• Net investment losses, both net rental property losses & financial investment losses
• Reportable super contributions, including reportable employer super contributions and deductible personal super contributions.
For Tax Time 2013, if you have private health insurance:
• each adult covered on a policy will receive an annual tax statement from their insurer to complete the tax return
• you will be entitled to a share of any rebate, based on share of the total policy payments.
What to do now;
• if you have private health insurance and receiving your rebate directly from your insurer, ensure they are calculating your rebate entitlement correctly now to avoid any tax debt
• to avoid any Medicare levy surcharge for 2014 tax time, ensure you have the necessary private hospital cover now.
• contact your local Accountant if you are unsure if you are affected.
The content of this article is information only and is not offered as advice. Readers are encouraged to consult a Registered Tax Agent to obtain advice tailored to their particular circumstances.