Understanding the Medicare Levy Surcharge and how to save tax.
The Medicare Levy Surcharge (MLS) is a Federal Government initiative to encourage individuals to take out private hospital cover, and where possible, to use the private hospital system to reduce the demand on the public system. The MLS is levied on Australian taxpayers who do not have private hospital cover and who earn above a certain income. The income thresholds increase incrementally, as does the MLS itself, depending on your Adjusted Taxable Income.
Will the MLS affect your stay in Australia?
Information for citizens of the UK, Sweden, Finland, Norway, Belgium, The Netherlands, Slovenia, Malta, Italy, the Republic of Ireland and NZ.
If you're a citizen of one of the countries mentioned above, your home country holds a 'Reciprocal Agreement' with Australia. This means that if you're currently working here and earning $93,000 or more a year, you may incur the Medicare Levy Surcharge at tax time; in which case we suggest you purchase a domestic hospital policy in addition to Overseas Visitors Cover (OVC), as your OVC is not considered an adequate tax exemption product by the Australian Tax Office. Our Basic Plus Hospital policy is our lowest priced private hospital insurance policy for making a tax saving and will potentially help you avoid paying hundreds of dollars in avoidable tax next year.
Information for international visitors from the rest of the world.
Visitors from non-reciprocal countries may be exempt from the Medicare Levy Surcharge by completing the Government’s ‘Medicare Entitlement Statement’ application form.
For further tax advice please contact your accountant or Australian Taxation Office
Related links:
Means-tested income salary thresholds.
The current Adjusted Taxable Income thresholds are outlined in the table below:
| POLICY TYPE | ADJUSTED TAXABLE INCOME |
|---|
SINGLE
COUPLE/FAMILY | $93,000 or less
$186,000 or less | $93,001 - 108,000
$186,001 - 216,000 | $108,001 - 144,000
$216,001 - 288,000 | $144,001 or more
$288,001 or more |
| APPLICABLE MLS | 0% | 1.0% | 1.25% | 1.5% |
Please note: The thresholds increase annually based on growth in Average Weekly Ordinary Time Earnings. Single parents & couples (including de facto couples) are subject to family tiers. For families with children, the thresholds are increased by $1,500 for each child after the first.