To help pay for the Medicare health scheme, resident taxpayers are subject to a Medicare levy. The rate of the Medicare levy is 1.5% of taxable income. Most Australians will have to pay the Medicare levy. Generally, tax offsets do not reduce this levy. In some cases, you may be exempt from the medicare levy or eligible for a reduction based on family income.
Low Income Thresholds – Individuals
The Medicare Levy is not payable (or is payable at reduced rates) by individuals and families on low incomes and by certain pensioners.
The 2008-09 Medicare Levy low-income thresholds for individuals are as follows:
| Single Taxpayer | Threshold Amount 1 $ |
Phase-in Limit 2 $ |
1.5% at or Above 3 $ |
|
Not eligible for Senior Australians Tax Offset or Pensioner Tax Offset
|
17,794 | 17,795 – 20,934 | 20,935 |
|
Eligible for the Senior Australians Tax Offset
|
28,867 | 28,868 – 33,961 | 33,962 |
|
Eligible for Pensioner Tax Offset only
|
25,299 | 25,300 – 29,763 | 29,764 |
1 1. No Medicare Levy is payable on taxable income at or below the threshold amount.
2 Medicare levy is payable at 10% of the excess over the excess over the threshold amount.
3 The medicare levy of 1.5% applies to the entire amount of taxable income.
Online Calculator
The Australian Taxation Office has an online Medicare Levy Calculator.
The calculator can provide an estimate of your Medicare
levy, taking into account any entitlement to a reduction or exemption.
In order to use the calculator you may need to know your taxable income, your spouse’s taxable income and if you are eligible for an exemption.
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Article by Christie Lewis
Christie is Practice Manager at Alan Lewis Accountants . Besides accounting, her passion is for all things small business (and blogging, of course). You can contact Christie directly at christie@lewistaxation.com.au.
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