The Medicare Levy and the Medicare Levy Surcharge are both related to Australia’s healthcare system, but they serve different purposes.
The Medicare Levy is a tax imposed on Australian taxpayers to help fund the country’s public healthcare system, known as Medicare. It is a fixed percentage of 2% of your taxable income. The revenue generated from this levy goes towards providing essential healthcare services to all citizens.
The Medicare Levy Surcharge is an additional tax imposed on Australian taxpayers who do not have an appropriate level of private patient hospital cover and their income exceeds the relevant Medicare Levy Surcharge thresholds.
The relevant thresholds, if you do not hold an appropriate level of private patient hospital cover are:
- $90,000 for singles or
- $180,000 (plus $1,500 for each dependent child after the first one) for families
The Medicare Levy Surcharge is taxed at a rate of 1%, 1.25% or 1.5%, depending on which tier your family’s or your income falls within. It is levied on your taxable income, total reportable fringe benefits and any amount on which family trust distribution tax has been paid.
The aim of the surcharge is to encourage those with higher incomes to take out private health insurance and relieve some of the burden on the public healthcare system.
In summary, the Medicare levy is a basic tax supporting the public healthcare system, while the Medicare levy surcharge is an extra tax for high-income earners without an appropriate level of private patient hospital cover.