Issue
Is a taxpayer liable to pay the Medicare Levy Surcharge imposed under section 8D of the Medicare Levy Act 1986 (MLA 1986) where the taxpayer and their spouse have had private patient hospital cover for the full year of income?
Decision
No. A taxpayer is not liable for the Medicare levy surcharge under section 8D of the MLA 1986 where they and their spouse have had private patient hospital cover for the full year of income.
Facts
The taxpayer is married but has no other dependants.
The taxpayer and their spouse had private patient hospital cover for the full year of income.
Neither the taxpayer nor their spouse were prescribed persons.
The combined taxable income of the taxpayer and their spouse exceeded $100 000.
Reasons for Decision
Section 8D of the MLA 1986 provides that a taxpayer will be subject to a Medicare levy surcharge where, for the whole or part of a year of income: • they are married; • they or at least one of their dependants (unless the dependant is a prescribed person) is not covered by private patient hospital cover; and • they are not a prescribed person.
Where a taxpayer satisfies all the above tests for the whole of the year of income and the combined taxable income (including reportable fringe benefits) of the taxpayer and their spouse exceeds the family surcharge threshold, a surcharge of 1 per cent of the taxpayer's taxable income is payable in addition to the amount of the Medicare levy otherwise payable.
The family surcharge threshold is defined in section 3A of the MLA 1986 as $100 000 where the taxpayer has only one dependant.
As the taxpayer and their spouse had private patient hospital cover for the full year of income, the taxpayer is not liable to pay the Medicare levy surcharge under section 8D of the MLA 1986.