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In October 2008, legislation was passed through Parliament raising the Medicare Levy Surcharge income thresholds.

The Medicare Levy Surcharge (MLS) is levied on Australian taxpayers who do not have private hospital cover and who earn above a certain income. The surcharge aims to encourage individuals to take out private hospital cover, and where possible, to use the private system to reduce the demand on the public system. The surcharge is calculated at the rate of 1% of taxable income.

The MLS threshold for singles will be raised from $50,000 to $70,000 per year. For couples and families, the threshold will be raised from $100,000 to $140,000 per year. In future the threshold will be indexed against average wages. These changes will apply to your income tax return for the 2008/2009 financial year and all following years.

If you have dropped out of cover recently or have yet to take cover, please note the changes to the legislation include a transitional provision. If you obtain appropriate private hospital cover before 1 January 2009 and then hold it through to 30 June 2009, for tax purposes you will be considered exempt from the MLS for the full 2008-2009 financial year. Normal waiting periods and Lifetime Health Cover requirements will still apply.

For more information about these issues please see:

• Medicare Levy Surcharge
• Lifetime Health Cover