Medicare Levy and Medicare Levy Surcharge – 2018/19 Surcharge

General Rate

 

Income Year

Rate

%

2019

2% of taxable income


Low-income Thresholds – Individuals - 2018/19

 

 

Single Taxpayer

Threshold Amount1

$

Phase-in Limit2

 

$

2% at or Above3

$

Single taxpayer not eligible for the Seniors and Pensioners Tax Offset

22,398

22,399 – 27,997

27,998

Single taxpayer eligible for the Seniors and Pensioners Tax Offset

35,418

35,419 – 44,272

44,273

  • No Medicare Levy is payable on taxable income levels at or below the Threshold Amount.
  • Where taxable income falls within the Phase-in Limit, the Medicare Levy is payable at 10% of the excess over the Threshold Amount.
  • The Medicare Levy of 2% applies to the entire amount of taxable income.



Low-income Thresholds – Families

A taxpayer may be eligible to pay no (or a reduced) Medicare Levy if their family income is within the thresholds set out below, and the taxpayer:

  • has a spouse (including de facto and same-sex) on the last day of the income year; or
  • has not remarried after their spouse died during the income year; or
  • is entitled to the Dependant (Invalid and Carer) Tax Offset in respect of the taxpayer's child; or
  • is entitled to a notional tax offset by having sole care of another individual (e.g., child) under 21 or under 25 if a full-time student.

The 2018/19 Medicare Levy low-income thresholds for families are as follows:

 

No. of Dependent Children/Students

Family Income

1

Threshold

$

Reduced Levy2

 

$

2%

at or Above3

$

Taxpayer Not Eligible for Seniors and Pensioners Tax Offset

0

37,794

37,795 – 47,242

47,243

1

41,265

41,266 – 51,581

51,582

2

44,736

44,737 – 55,920

55,921

3

48,207

48,208 – 60,258

60,259

4

51,678

51,679 – 64,597

64,598

5

55,149

55,150 – 68,936

68,937

6

58,620

58,621 – 73,275

73,276

Extra child

3,471

 

4,339

Taxpayer Eligible for Seniors and Pensioners Tax Offset

0

49,304

49,305 – 61,630

61,631

1

52,775

52,776 – 65,968

65,969

2

56,246

56,247 – 70,307

70,308

3

59,717

59,718 – 74,646

74,647

4

63,188

63,189 – 78,985

78,986

5

66,659

66,660 – 83,323

83,324

6

70,130

70,131 – 87,662

87,663

Extra child

3,471

 

4,339

  • Family Income is the combined taxable income of a taxpayer and their spouse. If the taxpayer does not have a spouse, Family Income is the taxpayer’s taxable income only. No Medicare Levy is payable on taxable income levels at or below the Family Income Threshold.
  • Where the family income falls within the range stated in this column, then each spouse who is liable for the Medicare levy will receive a reduction in the amount that is otherwise payable, in accordance with the formula in S.8(2) of the Medicare Levy Act 1986. This effectively limits the levy payable by taxpayers with families to 10% of the amount of family income that exceeds their family income threshold.

  • More specifically, where the family income equals or exceeds the amount stated in this column, then the levy payable by each spouse will be determined separately in accordance with the relevant threshold set out on page 4.

Medicare Levy Surcharge

The Medicare levy surcharge (‘MLS’) may apply in respect of a resident taxpayer where the taxpayer, their spouse and/or dependent children (if any) did not have the appropriate level of private patient hospital cover (subject to certain exceptions for ‘prescribed persons’) and the applicable ‘income test’ threshold is exceeded.

From 1 July 2012, the rate at which the MLS is applied is determined under a tiered income system whereby a taxpayer’s level of ‘income for surcharge purposes’5(on a spouse inclusive basis, where relevant) is classified as either ‘Base Tier’, ‘Tier 1’, ‘Tier 2’ or ‘Tier 3’.

The following table sets out the income thresholds and MLS rates that apply in respect of:

  • taxpayers who were single for the whole income year; and
  • taxpayers who were married (including de facto, same, or opposite sex partners) and/ or had at least one ‘dependent child’ for the whole income year.

The MLS only applies in respect of periods in which private patient hospital cover was not held for the taxpayer, their spouse and dependants (if relevant).

 

 

Base Tier

$

Tier 1

$

Tier 2

$

Tier 3

$

Medicare Levy Surcharge Income Thresholds1

Singles

90,000 or less

90,001 – 105,000

105,001 – 140,000

140,001+

Families and Couples2,3

0 dependants

180,000 or less

180,001 – 210,000

210,001 – 280,000

280,001+

1 dependant

180,000 or less

180,001 – 210,000

210,001 – 280,000

280,001+

2 dependants

181,500 or less

181,501 – 211,500

211,501 – 281,500

281,501+

3 dependants

183,000 or less

183,001 – 213,000

213,001 – 283,000

283,001+

4 dependants

184,500 or less

184,501 – 214,500

214,501 – 284,500

284,501+

5 dependants

186,000 or less

186,001 – 216,000

216,001 – 286,000

286,001+

Each extra child

1,500

1,500

1,500

1,500

Medicare Levy Surcharge Rate4

Rate

0.0%

1.0%

1.25%

1.5%

  • Due to a freeze on indexation, the above income thresholds will remain unchanged until 30 June 2021.
  • For a couple, their combined 'income for surcharge purposes' (defined below) is generally applied against the family surcharge threshold (but levied against each of the taxpayer’s own taxable income, reportable fringe benefits and on any amounts on which family trust distribution tax has been paid). However, if the income for surcharge purposes of one member of the couple does not exceed the applicable Medicare levy low income threshold (being $22,398 for 2018/19) that member is not liable for the MLS.
  • Where the taxpayer is not married but has one or more dependants, only the taxpayer's income for surcharge purposes is taken into account. For these purposes, a dependant is a resident child that is aged less than 21 years (or between 21 years and less than 25 years and receiving full-time education at a school, college or university) and the taxpayer contributed to the maintenance of the child.
  • If the MLS applies, it is levied on the taxpayer’s taxable income, reportable fringe benefits and on any amounts on which family trust distribution tax has been paid.
  • 'Income for surcharge purposes' is generally calculated as follows (Refer to S.995-1 (1) of the ITAA 1997):
    • the person’s taxable income for the income year (disregarding the net amount on which any family trust distribution tax was paid and any assessable amounts released under the first home super saver scheme); plus
    • the person’s reportable fringe benefits total (if any) for the income year; plus
    • the person’s reportable superannuation contributions for the income year; plus
    • the person’s total net investment loss for the income year; less

the amount mentioned in S.301-20(3) of the ITAA 1997 where the person is entitled to a tax offset under S.301-20(2) in relation to a superannuation lump sum amount for the income year.

Note, where a taxpayer’s circumstances change during the income year, (e.g, if the taxpayer marries, or ceases to be married) the MLS is calculated separately for each of these periods (based broadly on the rules set out above).



 

Personal Tax Offsets – 2018/19

Dependant (Invalid and Carer) Tax Offsets

The Dependant (Invalid and Carer) Tax Offset ('DICTO') is a non-refundable tax offset. A taxpayer may be entitled to this tax offset if, broadly, they maintain:

  • their spouse, who is an invalid or who cares for an eligible invalid;
  • their parent or their spouse’s parent, who lives in Australia and is an invalid or who cares for an eligible invalid; or
  • their or their spouse’s invalid child, brother or sister who is aged 16 years or older.

Note, the ATO generally refers to this offset as the Invalid and Invalid Carer Tax Offset to avoid the impression that it may be claimed in respect of any dependant of a taxpayer.

 

 

Description

2018/19

Max Offset

$

Max ATI1

$

DICTO1

2,717

11,150

1 If the taxpayer is claiming the DICTO in respect of a dependant other than a spouse, the combined Adjusted Taxable Income (‘ATI’) of the taxpayer and their spouse must not exceed $100,000. If claiming for a spouse, the taxpayer’s ATI must not exceed $100,000. In addition, the amount of the dependant offset reduces by

$1 for every $4 by which the dependant's ATI exceeds $282. This means that the offset completely cuts out when the dependant's ATI reaches the maximum amount set out in the above table.

A taxpayer's ATI includes their:

  • taxable income;
  • adjusted fringe benefits total;
  • tax-free pensions or benefits;
  • target foreign income;
  • reportable superannuation contributions; and
  • total net investment losses;

Less Deductible child maintenance expenditure (i.e., child support paid).


 

Notionally Retained Dependant Tax Offsets

The following dependant tax offsets have been abolished or replaced, however they have been notionally retained for various purposes (e.g., for calculating a taxpayer's entitlement to the Zone Tax Offset and/or Overseas Forces Tax Offset).

 

 

Description

Max Offset

$

Max ATI

$

First child under 21 (not being a student)

376

1,786

Each other child under 21 (not being a student)

282

1,410

Each student under 25

376

1,786

Sole parent

1,607

N/A


Low Income Tax Offset

Resident individuals (including trustees assessed under S.98 of the ITAA 1936 in respect of presently entitled resident beneficiaries) are entitled to the low-income tax offset1.

In the 2018/19 income year, the maximum offset of $445 is reduced by 1.5 cents for every dollar of taxable income over $37,000. The offset is not automatically indexed.

 

Taxable Income

$

 

Tax Offset1

0 – 37,000

$445

37,001 – 66,666

$445 – [(Taxable Income – $37,000) x 1.5%]

66,667+

Nil

1 Minors who are not classified as an 'excepted person' are not eligible to apply the low-income tax offset to reduce tax payable on their unearned (i.e., Division 6AA) income.


 

Low and Middle Income Tax Offset – 2018/19

Resident individuals (including trustees assessed under S.98 of the ITAA 1936 in respect of presently entitled resident beneficiaries) are entitled to the Low and Middle Income Tax Offset.

 

Taxable Income

$

 

Tax Offset1,2

0 – 37,000

Up to $200

37,001 – 48,000

$200 + 3% of excess over $37,000

48,001 – 90,000

$530

90,001 – 125,333

$530 – 1.5% of excess over $90,000

125,334+

Nil

  • As part of its 2019/20 Federal Budget, the Government has proposed an increase to the Low and Middle Income Tax Offset from 1 July 2018 (i.e., the 2019 income year) to provide tax relief of up to $1,080 per annum, as well as an increased base amount of $255 per annum. At the time of writing, the proposed increase in the Low and Middle Income Tax Offset had not progressed past the budget announcement and  is not yet law.
  • Minors who are not classified as an 'excepted person' are not eligible to apply the Low and Middle Income Tax Offset to reduce tax payable on their unearned (i.e., Division 6AA) income.



Net Medical Expenses Tax Offset

The Net Medical Expenses Tax Offset ('NMETO') has traditionally allowed eligible resident taxpayers to claim a non-refundable tax offset equal to a certain percentage of out-of-pocket (eligible) medical expenses paid by a taxpayer in respect of themselves or for a resident dependant, where those (net) expenses exceeded the relevant NMETO claim threshold. The NMETO has been income tested since 1 July 2012.

From 1 July 2013, the NMETO is being phased-out, basically as follows:

  • Category 'A' expenses – From the 2014 to 2019 income years, the NMETO is available in respect of expenses related to disability aids, attendant care and aged care. The NMETO will be abolished from 1 July 2019.
  • Category 'B' expenses – The NMETO was available in respect of all other eligible medical expenses, only for the 2014 and 2015 income years.

For the 2019 income year, the NMETO can only be claimed in respect of Category A expenses, as follows:

 

Status

Adjustable taxable income for rebates1,2

Medical expenses

Rate of Offset

 

 

Single

$90,000 or less

$2,377 or less

0

Greater than $2,377

20

Greater than $90,000

$5,609 or less

0

Greater than $5,609

10

 

 

Family3,4

$180,000 or less

$2,377 or less

0

Greater than $2,377

20

Greater than $180,000

$5,609 or less

0

Greater than $5,609

10

  • 'Adjusted taxable income for rebates’ is calculated as the taxpayer's taxable income (excluding any assessable FHSS released amount) + adjusted fringe benefits total + reportable super contributions + target foreign income + total net investment loss + any tax free pension or benefit – deductible child maintenance expenditure.
  • A taxpayer will be eligible for the family threshold if they are married on the last day of the income year or have a dependant on any day of the income year.
  • The threshold is increased by $1,500 for each dependant child under 21 or full-time student under 25, after the first.

  • Where the taxpayer is married it is the combined total of the taxpayer's and their spouse's ‘adjusted taxable income for rebates’ that is compared to the threshold.

 

Private Health Insurance Tax Offset (Rebate)

The private health insurance ('PHI') rebate is an amount that the government contributes towards the cost of PHI premiums. The rebate is only available in relation to a 'complying PHI policy' (basically, a policy offered by a registered health insurer that provides hospital cover, general treatment cover or both), excluding 'lifetime health cover loading' applied to the cost of a policy from 1 July 2013.

From 1 July 2012, the PHI rebate is income tested. Furthermore, from 1 April 2014, PHI rebate percentages are adjusted downwards by a single rebate adjustment factor.  This means that  in each year, two separate PHI rebate percentages will be applied in calculating a taxpayer's PHI rebate - one for the period 1 July to 31 March, and a separate percentage for the period   1 April to 30 June.

The following table sets out the PHI rebate income thresholds and percentages that apply for the 2019 income year:

 

 

Base Tier

$

Tier 1

$

Tier 2

$

Tier 3

$

Income Thresholds1

Singles2

Singles

90,000 or less

90,001 – 105,000

105,001 – 140,000

140,001+

Families/Couples3

0 dependants

180,000 or less

180,001 – 210,000

210,001 – 280,000

280,001+

1 dependant

180,000 or less

180,001 – 210,000

210,001 – 280,000

280,001+

2 dependants

181,500 or less

181,501 – 211,500

211,501 – 281,500

281,501+

3 dependants

183,000 or less

183,001 – 213,000

213,001 – 283,000

283,001+

4 dependants

184,500 or less

184,501 – 214,500

214,501 – 284,500

284,501+

5 dependants

186,000 or less

186,001 – 216,000

216,001 – 286,000

286,001+

Each extra child

1,500

1,500

1,500

1,500

Rebate 1 July 2018 to 31 March 2019

Aged under 654

25.415%

16.943%

8.471%

0%

Aged 65 - 694

29.651%

21.180%

12.707%

0%

Aged 70 or over4

33.887%

25.415%

16.943%

0%

Rebate 1 April 2019 to 30 June 2019

Aged under 654

25.059%

16.706%

8.352%

0%

Aged 65 - 694

29.236%

20.883%

12.529%

0%

Aged 70 or over4

33.413%

25.059%

16.706%

0%

  • Due to a freeze on indexation, the above income thresholds will remain unchanged until 30 June 2021.
  • A 'single' taxpayer is someone who is not married on the last day of the income year and does not have any dependent children or siblings.
  • A person will generally be assessed under the 'families/couples' tier thresholds if the person:
    • is married on the last day of the income year (including a de facto couple) – in this case, it is the combined income for surcharge purposes (i.e., the Base Tier) of the taxpayer and their spouse which is included; or
    • at any time during the year, contributes in a substantial way to the maintenance of at least one dependent child who is either the person's 'child' (as defined in S.995-1 of the ITAA 1997) or their 'sibling' who is dependent on them for economic support.

  • This is a reference to the age of the oldest person covered by the policy.

Seniors and Pensioners Tax Offset

The Seniors and Pensioners Tax Offset ('SAPTO') is broadly available to a taxpayer who:

  • on at least one day during the income year is eligible for a pension, allowance or benefit under the Veterans' Entitlements Act 1986, has reached pension age under that Act and is not in gaol; or
  • on at least one day during the income year is qualified for an age pension under the

Social Security Act 1991 and is not in gaol; or

has included in their assessable income, a social security pension or education entry payment (as defined in the Social Security Act 1991), or a service pension, carer service pension, income support supplement or Defence Force Income Support Allowance (DFISA), as defined in the Veterans' Entitlements Act 1986, or DFISA-type payment mentioned in Div. 4 of Part VIIAB of that Act; and on at least one day during the income year, is not in gaol.

The second condition that must be satisfied is that the taxpayer's 'rebate income' for the year is less than the amount prescribed by the Regulations (refer to the table below).

The 2018/19 maximum offset and threshold amounts for SAPTO are as follows:

 

 

Family Situation1,2

Maximum Offset

$

Shade-out Threshold3

$

Cut-out Threshold3

$

 

Single

 

2,230

 

32,279

 

50,119

 

Each member of a couple (married or de facto, whether of the same or opposite sex)4

 

1,602

 

28,974

 

41,790

Each member of a couple (married or de facto, whether of the same or opposite sex) separated due to illness or because one was in a nursing home3

 

2,040

 

31,279

 

47,599

  • For a taxpayer who is a member of a couple, eligibility is established by halving the combined 'rebate' income of the taxpayer and their spouse and comparing this amount against the relevant Cut-out Threshold. If this figure reaches the Cut-out Threshold, then neither person is eligible for SAPTO. If this figure is below the Cut-out Threshold, then the amount of each person’s SAPTO entitlement depends on their own rebate income and their eligibility for any unused portion of their spouse’s SAPTO.

An individual's 'rebate' income for a year of income is the sum of the individual's:

    • taxable income for the year (excluding any assessable FHSS released amount);
    • reportable superannuation contributions for the year;
    • total net investment loss for the year; and
    • the individual's adjusted fringe benefits total for the income year.
  • A person married for part of the year can claim on whatever basis gives the highest entitlement.
  • The maximum offset reduces by 12.5 cents for every dollar of rebate income over the Shade-out Threshold and reduces to nil for rebate income levels at or above the Cut-out Threshold.
  • The transfer of any unused portion of a spouse’s SAPTO may occur if both the taxpayer and their spouse are eligible for SAPTO, the spouse’s tax offset entitlement exceeds their tax payable, and tax payable by the taxpayer exceeds their tax offset entitlement.



Superannuation Spouse Contribution Tax Offset

The tax offset applies to non-concessional contributions made by a taxpayer to a Complying Superannuation Fund or Retirement Savings Account in respect of their low-income earning, or non-working, spouse (married or de facto). The amount of the offset for 2018/19 is set out in the table below.

 

Spouse's Assessable Income (SAI)1,2

$

Maximum Rebatable Contributions (MRC)

$

Maximum Offset3

 

$

0 – 37,000

3,000

540

37,001 – 39,999

3,000 – [SAI – 37,000]

MRC x 18%

40,000+

Nil

Nil

  • Including reportable fringe benefits and reportable employer superannuation contributions.
  • No tax offset is available if the spouse exceeds their non-concessional contributions cap for the 2019 income year, or if the spouse's total superannuation balance (as at 30 June 2018) equals or exceeds $1.6 million.
  • The offset is calculated as 18% of the actual contributions, if this results in a lower amount.


 

Zone Tax Offset

Taxpayers who live in remote areas of Australia may be entitled to a Zone Tax Offset ('ZTO') depending on the amount of time spent in the relevant zones. Generally speaking, taxpayers qualify as residents of a zone where they reside in the zone (not necessarily continuously) for 183 days or more. Remote areas do not include offshore rigs.

To find out whether a location is currently in a zone or special area, refer to the 'Australian Zone List', which can be found on the ATO website.

The 2018/19 zone rebate levels are set out below:

 

 

Description1,4

Maximum Offset2

$

Special Area in Zone A

1,173 + 50% of the relevant rebate amount3

Special Area in Zone B

1,173 + 50% of the relevant rebate amount3

Zone A

338 + 50% of the relevant rebate amount3

Zone B

57 + 20% of the relevant rebate amount3

  • The Zone A offset applies to a taxpayer who is a resident of Zone A during the year of income but has not resided or actually been in the special area of either zone (these areas are particularly isolated) during any part of the year. The Zone B offset applies to a taxpayer who is a resident of Zone B during the year of income but has not resided or actually been in Zone A, or the special area of either zone during any part     of the year.  Where a taxpayer does not fall into any of the previous categories but resided in a zone area  for some of the year, the Commissioner can determine a reasonable amount of tax offset to allow in the circumstances.
  • Eligible taxpayers may claim both the DICTO and either the ZTO or the Overseas Forces Tax Offset.
  • The 'relevant rebate amount' is the total of certain rebates or notional rebates to which the taxpayer is entitled or deemed to be entitled. Refer to page 7.

  • From 1 July 2015, the tax offset is limited to those people who are genuinely living (i.e, who have their usual place of residence) in a designated (or prescribed) zone (or remote area). As a result, the ZTO will no longer be available to fly-in-fly-out ('FIFO') and drive-in-drive-out ('DIDO') workers who work within   a particular zone during the income year, but who otherwise have their usual place of residence located outside of the zone in which they are working.

 

Key Trustee Rates of Tax – 2018/19

S.98(1) and (2) Assessments – Resident Beneficiary

The following rates apply where an individual resident beneficiary presently entitled to a share of the income of a trust is under a legal disability or, is not under a legal disability and is deemed to be presently entitled to a share of the income by virtue of S.95A(2) of the ITAA 1936.

 

Taxable Income

$

Rate1,2

%

Ordinary Income

0 – 18,200

Nil

18,201 – 37,000

19% of excess over $18,200

37,001 – 90,000

$3,572 + 32.5% of excess over $37,000

90,001 – 180,000

$20,797 + 37% of excess over $90,000

180,001+

$54,097 + 45% of excess over $180,000

Division 6AA Income2

0 – 416

Nil3

417 – 1,307

66% of excess over $416

1,308+

45% of the entire amount

  • The 2% Medicare Levy is not included, but may apply.
  • Assuming the individual is a beneficiary of only one trust.
  • Note that where the Eligible Taxable Income ('ETI') is under $416, it is added to other non-ETI and subject to normal marginal rates.


 

 

S.99 Trustee Assessment – Resident Deceased Estate

The following rates apply where a trustee is assessed under S.99 of the ITAA 1936 in respect of a resident deceased estate. Where the date of death is less than 3 years before the end of the income year, the trustee is assessed as a resident individual.

 

Taxable Income

$

Rate1

%

Less than 3 years since death

0 – 18,200

Nil

18,201 – 37,000

19% of excess over $18,200

37,001 – 90,000

$3,572 + 32.5% of excess over $37,000

90,001 – 180,000

$20,797 + 37% of excess over $90,000

180,001+

$54,097 + 45% of excess over $180,000

3 years or more since death

0 – 416

Nil

417 – 670

50% of excess over $416

671 – 37,000

$127.30 + 19% of excess over $6702

37,001 – 90,000

$7,030 + 32.5% of excess over $37,000

90,001 – 180,000

$24,255 + 37% of excess over $90,000

180,001+

$57,555 + 45% of excess over $180,000

  • The 2% Medicare Levy does not apply to S.99 assessments of deceased estate trustees.
  • If the share of taxable income is between $670 and $37,000, the entire amount from $0 will be taxed at the rate of 19%.


 

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