Ever wondered about why the Medicare levy is a part of your annual taxes? How can you lower the amount you must pay? Is it possible that you are exempt from paying this levy? Adelaide accountant Kym Nitschke breaks down the process and explains how you may qualify for a reduction.
What Is The Medicare Levy?
The medicare levy assists Australian residents who need financial assistance to access needed medical care. Medicare enables people to enjoy free or low-cost medical care. This is a fantastic provision for those whose circumstances don’t allow them to work and earn enough to pay for medical expenses.
But where do the resources to fund Medicare come from?
That’s right, the Medicare levy.
Australian taxpayers contribute towards Medicare with a proportionate amount (levy) taken out of their taxable income every year. This means that this tax year you can expect that 2% of your taxable income will go towards Medicare.
Medicare Levy Reduction
Generally speaking, there is no simple way to back out of paying the levy. It’s pretty straightforward that you either qualify for paying the levy, or you don’t.
The two main reductions are:
If your taxable income is less than $20,896 ($33,044 for seniors and pensioners), then you do not have to pay the levy.
If your taxable income falls within the range of $20,896 and $26,121 ($33,044 and $41,306 for seniors and pensioners), then you will only have to pay a portion of the levy.
However, if you are single with no dependents and your income is over $26,102 ($41,305 for seniors and pensioners), then you do not qualify for the reduction.
Here are a few of the primary exemptions to paying the Medicare levy:
1. Medical reasons
2. Being foreign or a resident of Norfolk Island
3. Not being entitled to Medicare Benefits
Is There Any Other Way to Reduce the Levy?
Even if you have private health insurance, you still have to pay the Medicare levy. While you cannot use tax offsets to directly reduce your levy, such offsets may help to lower how much of your income is considered taxable. The taxable amount is what is factored into determining how much levy you must pay. By searching for all applicable tax breaks, you can reduce your responsibility towards paying the Medicare levy.
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Need accounting or financial advice? Call us, Nitschke Nancarrow, on (08) 8379 9950. Also, feel free to send me an email to learn more.