Private Health Insurance Rebate
From 1 July 2012, the Government will introduce three new 'Private Health Insurance Incentives Tiers'.
Private Health Insurance Incentive Tiers (2011-2012) with effect 1 July 2012
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The Medicare Levy Surcharge, currently set at 1.0%, applies to individuals and couples/families on high annual incomes
(currently $80,000 per year for singles and $160,000 per year for couples/families), who do not have adequate levels of private hospital coverage.
The Medicare levy is currently set at 1.5%. This tax applies to all tax payers, including those with adequate levels of private hospital coverage.
An exemption applies to low income earners.
Note: The thresholds increase annually, based on growth in Average Weekly Ordinary Time Earnings (AWOTE).
Single parents and couples (including de facto couples) are subject to the family tiers.
For families with children, the thresholds are increased by $1,500 for each child after the first.
Singles earning $84,000 or less and families earning $168,000 or less will continue to receive the existing 30, 35 and 40 per cent rebate, depending on their age.
The three Acts passed by Parliament governing the tiers are the:
- Fairer Private Health Insurance Incentives Act 2012;
- Fairer Private Health Insurance Incentives (Medicare Levy Surcharge) Act 2012; and
- Fairer Private Health Insurance Incentives (Medicare Levy Surcharge – Fringe Benefits) Act 2012.
Medicare Levy Surcharge
For the 2011-12 income tax year, the income thresholds for the Medicare levy surcharge were increased to $80,000 per year for singles and $160,000 per year for couples/families.
The Australian Taxation Office (ATO) has advised the three separate income thresholds for the 2012-13 income tax year (as shown in the above table).
It is important to note that under the Tax Laws Amendment (Medicare Levy Surcharge Thresholds) Act (No 2) 2008, the income thresholds are indexed each year by using indexation factors calculated for full time adult average weekly ordinary time earnings.
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