Commonwealth of Australia Explanatory Memoranda Commonwealth of Australia Explanatory Memoranda[Index] [Search] [Download] [Bill] [Help]
2008
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
TAX LAWS AMENDMENT (MEDICARE LEVY SURCHARGE THRESHOLDS)
BILL 2008
EXPLANATORY MEMORANDUM
(Circulated by the authority of the
Treasurer, the Hon Wayne Swan MP)
Table of contents
General outline and financial impact ....................................................... 5
Chapter 1 Increasing the Medicare levy surcharge
thresholds ..................................................................... 7
Index ..................................................................................................... 11
General outline and financial impact
Increasing the Medicare levy surcharge thresholds
This Bill amends:
· the Medicare Levy Act 1986 and the A New Tax System
(Medicare Levy Surcharge-Fringe Benefits) Act 1999 to:
- increase the Medicare levy surcharge threshold for
individuals from $50,000 to $100,000; and
- increase the Medicare levy surcharge threshold for
families from $100,000 to $150,000.
Date of effect: The increased Medicare levy surcharge thresholds apply
from the 2008-09 year of income and later years of income.
Proposal announced: This measure was announced in the 2008-09
Budget and in the Treasurer's Press Release No. 038 of 13 May 2008.
Financial impact: This measure will have these revenue implications:
2007-08 2008-09 2009-10 2010-11 2011-12
- - -$195m -$235m -$230m
This measure will also result in a decrease in Government expenditure on
the private health insurance rebate. As such, the overall financial impact
over the forward estimates is a net saving of approximately $299 million.
Compliance cost impact: Negligible.
5
1 Chapter 1
Increasing the Medicare levy surcharge
thresholds
Outline of chapter
.1 This Bill amends the Medicare Levy Act 1986 and the A New Tax
System (Medicare Levy Surcharge-Fringe Benefits) Act 1999 to increase
the Medicare levy surcharge thresholds for individuals and families.
Context of amendments
.2 The Medicare levy surcharge imposes a one per cent increase in
Medicare levy liability on certain individuals who do not have private
patient hospital insurance. Individuals with taxable incomes over $50,000
and couples with a combined taxable income over $100,000 may be liable
for the surcharge. These thresholds have not been increased since the
Medicare levy surcharge was introduced in 1997.
Summary of new law
.3 This measure increases the thresholds below which families and
individuals are not required to pay the Medicare levy surcharge.
Comparison of key features of new law and current law
New law Current law
Individuals with taxable incomes Individuals with taxable incomes above
above $100,000 who do not have $50,000 who do not have appropriate
appropriate private patient hospital private patient hospital cover are
cover are required to pay the required to pay the Medicare levy
Medicare levy surcharge. surcharge.
7
New law Current law
Families with no more than one Families with no more than one child
child and who have taxable incomes and who have taxable incomes above
above $150,000 who do not have $100,000 who do not have appropriate
appropriate private patient hospital private patient hospital cover are
cover are required to pay the required to pay the Medicare levy
Medicare levy surcharge. surcharge.
Detailed explanation of new law
.1 This Bill increases the Medicare levy surcharge thresholds for
individuals and families for the 2008-09 year of income and subsequent
years of income.
.2 The meaning of family surcharge threshold is located in section 3A of
the Medicare Levy Act 1986. This section is repealed and replaced. The
effect of this new section will be the same except that the thresholds
applicable for families will be $150,000 rather than $100,000. [Schedule 1,
item 4]
.1
Fergus and Allison do not have appropriate private patient hospital
cover and have a combined income in excess of $100,000, but below
$150,000. In 2007-08 Fergus and Allison would be liable to pay the
Medicare levy surcharge. As a result of the increase in the threshold,
Fergus and Allison would not be liable for the Medicare levy
surcharge in the 2008-09 income year.
.3 A similar amendment is made to subsection 6(2) of the A New Tax
System (Medicare Levy Surcharge-Fringe Benefits) Act 1999. These
provisions ensure that reportable fringe benefits are taken into account in
calculating income for Medicare levy surcharge purposes. If reportable
fringe benefits were not taken into consideration, individuals would be
able to swap cash salary for fringe benefits and therefore potentially avoid
or reduce their liability to the Medicare levy surcharge.
.4 This Bill ensures that those families whose income includes reportable
fringe benefits also receive the benefit of the increase in the family
threshold from $100,000 to $150,000. [Schedule 1, items 1 and 2]
.5 For those without dependants and who are not married at any time
during the income year, the Medicare levy surcharge threshold is
increased from $50,000 to $100,000. [Schedule 1, item 5]
.1
Ben, who is single and earns between $50,000 and $100,000, does not
have appropriate private patient hospital cover. In 2007-08 Ben would
be liable to pay the Medicare levy surcharge. As a result of the
increase in the Medicare levy surcharge threshold, Ben would not be
liable to pay the Medicare levy surcharge for 2008-09.
.6 For individuals who are beneficiaries of trust income the threshold is
increased from $50,000 to $100,000 [Schedule 1, item 6]. In addition, for
individuals whose remuneration include reportable fringe benefits, their
Medicare levy surcharge thresholds are increased from $50,000 to
$100,000 [Schedule 1, item 3].
Application and transitional provisions
.7 These amendments apply to assessments for the 2008-09 year of
income and later years of income. [Schedule 1, item 7]
9
Index
Schedule 1: Singles and families income thresholds
Bill reference Paragraph number
Items 1 and 2 1.7
Item 3 1.9
Item 4 1.5
Item 5 1.8
Item 6 1.9
Item 7 1.10
11
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