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Tax return 2018 Medicare levy: Are you eligible for Medicare exemption? Or Do you have private hospital cover.

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  1. A tax payer with no Medicare entitlement.

    The first and most important thing you should check, are you entitled to Medicare exemption? For most tax payers, the answer is ‘no’ but, in some substance, you are entitled to exemption and do not have to pay part or, all of Medicare levy at all. The fact is, if you were not entitled Medicare benefit for part or the entire financial year, you can declare it in your tax return. For instance, you are a resident for tax purposes but are not entitled Medicare benefit, as you are a working holiday worker or an international student who is not covered by Medicare, you can claim the reduction in your income tax return for the duration that you were not entitled. However, you must have Medicare entitlement statement before you make a declaration. For those who want to get Medicare entitlement statement, you can only receive Medicare for the past year which means, if you want to apply for Medicare entitlement statement for financial year 2018, the time you can submit your application will be after 1st July 2018. According to Medicare, from July to October is particularly busy time for hence, your application might take up to 6 weeks to be processed which could causes significant delays in your income tax return. If you lodge your tax return by yourself, make sure you don’t miss out the deadline by delayed process. Alternatively, you can amend your tax return once you finalise income tax return. For individual income tax return, you can make an amendment for previous 2 financial years. If you still not confident, Medicare provides detailed information at their website. (link:


  2. A tax payer with low income.

    If you are earning less than government threshold, it is most likely that you won’t be charged for levy of get reduction for the amount.


    • For a single tax payer, you will not be charged any Medicare levy if your income is under $21,655. If your income is more than $21,655 and under $27,068 you will be charged only the part of levy any amount excess $21,655.
    • If you are a taxpayer with families, you may still get reduction based on your family income. The threshold for low-income household is $36,541 and $3,356 per children will be added on top of the amount. In general, any child under 21 years old you maintained who was not a full-time student or any full-time student aged under 25 years old at a school, college or university will be considered as dependent.


    • For a single seniors and pensioners, threshold is $34,244 and the threshold will increase to $47,670  plus $3,356 per dependent child.


    In most cases, you wouldn’t need to look for which category you fall in but, it can be confusing if you are not confident whether you should declare your children under your tax return. For example, you and your partners are separated, the person who receives family tax benefit should declare dependent under their tax return.


  3. A tax payer with high income (more than $90,000)

    If you earn more than $90,000 during the financial year, you will have to pay 2% Medicare levy. On top of that, there is Medicare levy surcharge imposed depends on which tier your income falls in unless you have private hospital cover for you or your family.

    Below is the threshold for individual tax payer for Medicare surcharge.

    Tier 1

    Tier 2

    Tier 3

    $90,001 - $105,000

    $105,001 - $140,000

    $ 140,001 or more




    For a family threshold the amount goes 2times higher. Although the percentage seems insignificant, the actual amount you might be liable is at least $900, which isn’t small amount to most tax payers. After all, you might consider to getting a private hospital cover not only for health purposes but for tax purposes. Nevertheless, choose to take out private hospital cover is a decision impacts on your life directly therefore, a tax payer should take reasonable care when making a decision.

Do you need help in your tax planning? Taxshark has an excellent team of tax experts to support you!

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