What is Medicare Levy

Medicare is the scheme that gives Australian residents access to health care.

To help fund the scheme, resident taxpayers are subject to a Medicare levy. Normally, we calculate your Medicare levy at the rate of 1.5% of your taxable income. A variation to this calculation may occur in certain circumstances.

Generally, tax offsets do not reduce your Medicare levy. However, if you have excess refundable tax offsets, we use them to reduce your tax, including your Medicare levy.

Medicare Levy Reduction - A reduction in medicare levy can apply depending on taxable income (individual and combined family income) and number of dependant children. For the 2009 year, for example, medicare levy is nil if you meet one of the following tests:

  • Individual and income < $17794
  • Individual eligible for Senior Australians Tax Offset < $28867 (higher threshold applies for couples)
  • Individual eligible for the Pensioner Tax Offset < $25299 (higher threshold applies for couples)
  • Family (including single parent families)
  • ==> 1 child < $42000
  • ==> 2 children < $44757
  • ==> 3 children < $47514
  • ==> 4 children < $50271
  • ==> 5 children < $53028 etc
The above thresholds have various shade-in limits.
Medicare Levy Exemption - There are several exemption categories that include:
  • If you are not an Australian resident you are EXEMPT from Medicare Levy.
  • Defence force members who receive free medical under Defence Force arrangements are exempt (but not non-defence force spouses)
  • Norfolk Island residents.

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