The amount of the Medicare levy surcharge can be equal to the amount of money that you would spend on a yearly health insurance policy.
The Australian Taxation Office defines this levy as a monetary amount charged to households that do not carry enough private health insurance and that makes over a set amount of income. If the government feels that you are a high-income earner and you do not have enough insurance to cover yourself, you will be forced to pay a tax at the end of the year.
The levy will be somewhere between 1 and 1.5 percent of your gross income. This means that the tax amount is based on all your income for the year, including bonuses and earnings from stocks. Any trust payments that you may have gotten will also be added to your total earned income. This is in addition to the 1.5% Medicare levy that most taxpayers already pay every year. So, in effect, you could be paying a levy of up to 3% in total, depending upon your specific circumstances.
There are ways to get yourself exempt from this tax. If you do not qualify for Medicaid, you will be excused from paying the extra amount. If you are blind or have a Veterans Affair Repatriation Card, you will be exempt. You will also not have to pay the levy if you are a foreigner. This means that you pay taxes and claim residency in a different state.
The crazy thing is that you do not have to be stuck paying this levy. The amount of the Medicare levy surcharge can be equal to the amount of money that you would spend on a yearly health insurance policy. Yes, you will have to make a payment to obtain a private patient policy, but it is better than paying one lump sum at the end of the year, which is a fine for not doing what you should be doing.
Currently, the earning threshold is set at $90,000 a year for one person. $180,000 for a couple. For every child, the threshold goes up to $1,500 per kid. If you think that you may reach these amounts within the year, check out some insurance packages instead of waiting until the end of the year to see what your income is. It is simply better to pay a plan’s premiums rather than being charged a percentage of your income as a surcharge.
This surcharge is set up to encourage people that have a high enough income to get private coverage. This allows the Medicare system to help people who need help, which it was designed for. High-income earning households should not rely on this government-funded health coverage. There are adequate policies available to you instead.
The surcharge works like every other type of tax if you are found to owe it. You will have to add it into the tax software you use or that your accountant uses. The amount you owe will either be added to the amount of taxes you owe for the year, or it will be deducted from any money you may have come back to you.