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2010-2011-2012-2013
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
TAX LAWS AMENDMENT (MEDICARE LEVY) BILL 2013
EXPLANATORY MEMORANDUM
(Circulated by the authority of the
Deputy Prime Minister and Treasurer, the Hon Wayne Swan MP)
Table of contents
Glossary .................................................................................................. 1
General outline and financial impact ....................................................... 3
Chapter 1 Medicare levy family income threshold .......................... 5
Index ..................................................................................................... 11
Glossary
The following abbreviations and acronyms are used throughout this
explanatory memorandum.
Abbreviation Definition
CPI consumer price index
ICESCR International Covenant on Economic, Social
and Cultural Rights
ML Act Medicare Levy Act 1986
1
General outline and financial impact
Medicare levy low-income threshold for families
This Bill amends the Medicare Levy Act 1986 to increase the Medicare
levy low-income threshold for families and the dependent child-student
component of the threshold.
Date of effect: This measure applies to the 2012-13 income year and later
income years.
Proposal announced: This measure was announced in the 2013-14
Budget on 14 May 2013.
Financial impact: This measure has the following revenue implications:
2013-14 2014-15 2015-16 2016-17
$16m $8m $7m $7m
Human rights implications: This Bill is compatible with human rights.
See Statement of Compatibility with Human Rights -- Chapter 1,
paragraphs 1.15 to 1.19.
Compliance cost impact: Nil.
3
Chapter 1
Medicare levy family income threshold
Outline of chapter
1.1 This Bill amends the Medicare Levy Act 1986 (ML Act) to
increase the Medicare levy low-income threshold for families and the
dependent child-student component of the threshold in line with
movements in the consumer price index (CPI).
Context of amendments
1.2 The ML Act provides that no Medicare levy is payable by
low income individuals and families where their taxable income or
combined taxable family income does not exceed the stated threshold
amounts.
1.3 In recent years, all of the low-income thresholds in the ML Act
have been indexed annually in line with movements in the CPI.
1.4 The Clean Energy (Tax Laws Amendments) Act 2011 amended
the low-income thresholds, other than the family income threshold and the
dependent child-student component of the family income threshold, in
response to the increase in effective tax-free thresholds introduced by that
Act.
1.5 This Bill increases the remaining low-income thresholds in line
with movements in the CPI for the 2012-13 income year.
Summary of new law
1.6 This Bill amends subsections 8(5) to (7) of the ML Act to
increase the family income threshold amount and the dependent
child-student component of the `family income threshold'.
5
Tax Laws Amendment (Medicare Levy) Bill 2013
Comparison of key features of new law and current law
New law Current law
The family income threshold for the The family income threshold for the
2012-13 income year is $33,693. 2011-12 income year is $32,743.
The child-student component of the The child-student component of the
family income threshold for the family income threshold for the
2012-13 income year is $3,094. 2011-12 is $3,007.
Detailed explanation of new law
Medicare levy family income threshold
1.7 This Bill increases the family income threshold amount and the
dependent child-student component of the family income threshold for the
2012-13 income year in line with movements in the CPI.
1.8 Section 5 of the ML Act imposes the Medicare levy, and
section 6 specifies the rate of the Medicare levy, being 1.5 per cent of
taxable income.
1.9 Section 8 specifies the formula for calculating the amount of the
Medicare levy for a person who has a spouse or dependents. The
calculation applies where the family income in relation to the relevant
person exceeds the `family income threshold'.
1.10 The `family income threshold' specified in
subsections 8(5) to 8(7) will increase from $32,743 to $33,693.
[Schedule 1, items 1, 3 and 4]
1.11 The dependent child-student component of the family income
threshold in subsection 8(5) will also increase from $3,007 to $3,094 for
each dependent child-student. [Schedule 1, items 2 and 4]
Summary of Medicare levy low-income threshold amounts and phase-in
ranges for families
1.12 The increased threshold amounts and phase-in ranges for the
2012-13 income year and future income years are summarised in
Table 1.1.
1.13 The Medicare levy phases in at a rate of 10 cents in the dollar
where the taxable income or combined family taxable income exceeds the
threshold amounts (section 7).
6
Medicare levy family income threshold
Table 1.1: Medicare levy low-income threshold amounts and phase-in
ranges for families
Families1 2 No levy payable if Reduced levy if family Ordinary rate of levy
with the family taxable income taxable income is payable where family
following does not exceed within range taxable income is
children and/or (figure for 2011-12) (inclusive) equal to or exceeds
students (figure for 2011-12)
0 $33,693 ($32,743) $33,694 - $39,638 $39,639 ($38,522)
1 $36,787 ($35,750) $36,788 - $43,278 $43,279 ($42,059)
2 $39,881 ($38,757) $39,882 - $46,918 $46,919 ($45,597)
3 $42,975 ($41,764) $42,976 - $50,558 $50,559 ($49,135)
4 $46,069 ($44,771) $46,070 - $54,198 $54,199 ($52,672)
5 $49,163 ($47,778) $49,164 - $57,838 $57,839 ($56,210)
4 5
6 3
$52,257 ($50,785) $52,258 - $61,478 $61,4796 ($59,748)
Application and transitional provisions
1.14 The amendments made by this Bill apply to assessments for the
2012-13 income year and later income years.
1
These figures also apply to taxpayers who are entitled to a tax offset in respect of a
child-housekeeper or housekeeper, or who would have been entitled to a sole-parent rebate
(had the sole parent rebate not been repealed with effect from 1 July 2000).
2
Tax and Superannuation Laws Amendment (2013 Measures No. 2) Bill 2013 contains
amendments that may affect the eligibility of some taxpayers to tax offsets mentioned in
note 1.
3
Where there are more than six dependent children and/or students, add $3,094 for each extra
child or student.
4
See note 3.
5
Where there are more than six dependent children and/or students, add the appropriate amount
of the child/student component of the upper phase-in limit for each extra child or student.
6
See note 5.
7
Tax Laws Amendment (Medicare Levy) Bill 2013
STATEMENT OF COMPATIBILITY WITH HUMAN RIGHTS
Prepared in accordance with Part 3 of the Human Rights
(Parliamentary Scrutiny) Act 2011
Tax Laws Amendment (Medicare Levy) Bill 2013
1.15 This Bill is compatible with the human rights and freedoms
recognised or declared in the international instruments listed in section 3
of the Human Rights (Parliamentary Scrutiny) Act 2011.
Overview
1.16 This Bill amends the Medicare Levy Act 1986 to increase the
Medicare levy low income threshold for families and the dependent
child-student component of the threshold in line with movements in the
CPI.
1.17 This will ensure that low-income families who were exempt
from the Medicare levy in the 2011-12 income year will continue to be
exempt in the 2012-13 income year if their incomes have increased in line
with or less than the CPI.
Human rights implications
1.18 This Bill engages the following human rights:
`Right to Health
Article 12(1) of the International Covenant on Economic, Social and
Cultural Rights (ICESCR) recognises the right to the enjoyment of
the highest attainable standard of physical and mental health.
While ICESCR contains no definition of health, the United Nations
Committee on Economic Social and Cultural Rights has stated that
the right to health is not to be understood as a right to be healthy.7
The Committee has stated that the right to health contains both
freedoms and entitlements, and the entitlements include the right to a
7
United Nations Committee on Economic Social and Cultural Rights, General Comment
No 14, paragraph 8.
8
Medicare levy family income threshold
system of health protection which provides equality of opportunity
for people to enjoy the highest attainable level of health.8
Increasing the low income threshold for families promotes the right
to health by ensuring that low-income families who were exempt
from the Medicare levy in 2011-12 income year will continue to be
exempt in the 2012-13 income year if their incomes have increased in
line with or less than the CPI, promoting their access to the health
care system.'
Conclusion
1.19 This Bill is compatible with human rights because it promotes
the right to health by ensuring that those families on lower incomes are
not liable to pay the Medicare levy, therefore providing equality of
opportunity for people to enjoy access to the health care system without
additional financial burden.
Assistant Treasurer, the Hon David Bradbury
8
See note 7.
9
Index
Schedule 1: Medicare levy family income threshold
Bill reference Paragraph number
Items 1, 3 and 4 1.10
Items 2 and 4 1.11
11