Medicare levy surcharge - taxpayer covered by private patient hospital cover part year and non resident for remainder

Is the taxpayer liable to pay the Medicare levy surcharge under section 8B of the Medicare Levy Act 1986 (MLA 1986) where for part of the income year they were covered by private patient hospital cover and for the remainder they were not a resident of Australia?

No. The taxpayer is not liable to pay the Medicare levy surcharge under section 8B of the MLA 1986, as during their period of residency they were covered by private patient hospital cover and were a prescribed person for the period they were a non resident.

The taxpayer is not married and does not have any dependants.

The taxpayer was a resident of Australia for tax purposes for part of the current income year.

While a resident of Australia the taxpayer had private patient hospital cover.

The taxpayer then moved permanently overseas and ceased to be a resident of Australia.

Section 8B 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 not married; • do not have dependants; • do not have private patient hospital cover; and • are not a prescribed person.

Where a person satisfies all the above requirements for the whole of the year of income and the person's taxable income exceeds $50 000, a surcharge at 1 per cent of the person's taxable income is payable in addition to the amount of Medicare levy otherwise payable. Where these requirements are not met for the whole or part of the income year, the taxpayer is not liable to the Medicare levy surcharge for that period in the year.

Whether a person is a 'prescribed person' for the purposes of the Medicare levy surcharge is determined by section 251U of the Income Tax Assessment Act 1936 (ITAA 1936). Paragraph 251U(1)(d) of the ITAA 1936 provides that a person will be a 'prescribed person' during the period that the person was a non resident.

The taxpayer had private patient hospital insurance throughout the period they were a resident of Australia and were a 'prescribed person' for the period that they were a non resident. Accordingly, the taxpayer does not meet the requirements under section 8B of the MLA 1986 and will not be liable for the Medicare levy surcharge during the income year.