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How to avoid the Medicare Levy Surcharge

Who does the Medicare Levy Surcharge apply to?

The Medicare Levy Surcharge (MLS) is a tax applied to people who earn above $90,000 as a single and $180,000 as a single parent, couple or family and don't have an appropriate level of Hospital cover.

The MLS is designed to reduce the strain on the public system by encouraging people to go to private hospitals instead.

Don't I get taxed anyway?

Don't I get taxed anyway?

The simple answer is yes, most Australian taxpayers are charged the Medicare Levy. This is our contribution to supporting the public healthcare system.

However, the Medicare Levy Surcharge as the name suggests, is an additional tax of 1 - 1.5% which is applied to people over the income threshold.

It could cost you up to 1.5% extra

It could cost you up to 1.5% extra

The Medicare Levy Surcharge starts at 1% and increases up to 1.5% depending on your annual income. Without appropriate Hospital cover, this could result in up to $900 or more in extra tax.

 
Base Tier
Tier 1
Tier 2
Tier 3

Income level Singles

$90,000 or less
$90,001 to $105,000
$105,001 to $140,000
$140,001 or more

Income level Families

$180,000 or less
$180,001 to $210,000
$210,001 to $280,000
$280,001 or more

Medicare Levy Surcharge

0%
1%
1.25%
1.5%

Source: Australian Tax Office. These thresholds apply for the 2021/2022 financial year. For families, and single parent families the threshold increases by $1,500 for each dependant child after the first. There are specific rules for calculating income for Medicare Levy Surcharge purposes. For more information visit the Australian Tax Office.

How to avoid the Medicare Levy Surcharge?

How to avoid the Medicare Levy Surcharge?

If you are currently or are likely to pay the MLS, join any ING Health Insurance Hospital cover before 1 July and maintain it for the full financial year to avoid paying the MLS.

The Australian Tax Office has specific rules regarding who is covered under the Medicare Levy Surcharge and how to define your income for Medicare Levy Surcharge purposes. For information get in touch with your accountant, financial planner or visit the Australian Tax Office.

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