A few weeks ago I wrote about Private Health Insurance – Understanding the Rebate, today I’m going to take that a step in a slightly different direction and chat about income for Medicare Levy Surcharge (MLS) purposes.
Essentially, if you are an individual taxpayer without appropriate Private Health Insurance and with income exceeding the threshold for MLS purposes – you will be charged the Medicare Levy Surcharge (MLS) upon lodgement of your income tax return.
When determining if you are required to pay the MLS, the Australian Taxation Office (ATO) take into consideration your “income” for this purpose, which is not simply your taxable income – rather it includes other amounts that impact on your taxable income, such as:
- taxable income
- reportable fringe benefits
- total net investment losses
- reportable superannuation contributions
- a share of net income of a trust on which the trustee must pay tax (ie: not included in your taxable income)
- exempt foreign employment income
At this time of year, nearing the end of the financial year, there is plenty of advertising from health insurance companies relating to this exact topic – how to avoid the MLS – you should take this opportunity to review your income for MLS purposes and determine whether a private health insurance policy is suitable for your circumstances.
In reviewing your situation, I realise that some of the terms above might be foreign to you, if you are unsure if they apply to you, I recommend you ask your accountant!