What is the Medicare Levy?

The Medicare Levy, typically calculated at 2% of your taxable income, is the amount paid by Australian taxpayers that partially funds Medicare access for residents. It is reduced accordingly when your taxable income falls below a certain threshold. In some cases, you are exempt from paying the Medicare levy at all.

 

In the 2017-2018 financial year you are: 
  • Not required to pay the Medicare levy if your taxable income is less than or equal to $21,980 ($34, 758 for seniors and pensioners)
  • Required to pay only part of the Medicare levy if your taxable income is between $21,980 and $27,475 ($34,758 and $43,447 for seniors and pensioners)
  • Must pay the full Medicare levy amount if your taxable income is above $26,668 ($42,172 for seniors and pensioners)

If your taxable income is more than $27,476 ($43,448 for seniors and pensioners), you could still qualify for a Medicare levy reduction. This is dependent on your family taxable income, which consists of:

  • The combined taxable income of you and your spouse, OR
  • Your taxable income if you were a sole parent for the year

What is SFSS?

Student Financial Supplement Scheme

SFSS, also known as the Student Financial Supplement Scheme, was a voluntary loan program designed to help tertiary students cover their expenses while studying.

Loan repayments do not commence until five years after the loan was taken out by the student AND only when income reaches a certain level (listed in tables below). This loan program ended in December of 2003.

Your repayment income consists of your taxable income plus any of the following:

  • Total net investment loss
  • Total reportable fringe benefits
  • Reportable superannuation contributions
  • Exempt foreign employment income

2017-2018 repayment income thresholds and rates: 

Repayment Income Repayment Rate
Below $55,874 Nil
$55,874 – $68,602 2%
$68,603 – $97,377 3%
$97,378 and above 4%

 

2016-2017 repayment income thresholds and rates: 

Repayment Income Repayment Rate
Below $54,869 Nil
$54,869-$67,368 2%
$67,369-$95,626 3%
$95,627 and above 4%

 

2015-2016 repayment income thresholds and rates:

Repayment Income Repayment Rate
Below $54,126 Nil
$54,126-$66,456 2%
$66,457-$94,331 3%
$94,332 and above 4%

 

2014-2015 repayment income thresholds and rates: 

Repayment Income Repayment Rate
Below $53,345 Nil
$53,345-$65,497 2%
$65,498-$92,970 3%
$92,971 and above 4%

 

 For more information, please visit the Australian Government Student Assist website.

What is the Medicare Levy Surcharge Exemption?

Medicare Levy Surcharge Exemption

Every Australian resident has to pay a Medicare Levy of 2% of their taxable income. On top of this, you may also pay the Medicare Levy Surcharge (MLS), which amounts to 1%, 1.25% or 1.5% of:

  • Your taxable income
  • Your total reportable fringe benefits, and
  • Any amount on which family trust distribution has been paid

You may be exempt from the Medicare Levy Surcharge if your income was below certain levels. If your income was less than $90,000 and you were single without a dependent child or less than $180,000 in most other situations, you probably will not have to pay the MLS.

Below are the income thresholds and Medicare Levy Surcharge rates for 2014-2015, 2015-2016 and 2017-2018:

Unchanged Tier 1 Tier 2 Tier 3
Single Households $90,000 or less $90,001-$105,000 $105,001-$140,000 $140,001 or more
Family Households $180,000 or less $180,001-$210,000 $210,001-$280,000 $280,001 or more
Medicare Levy Surcharge Rate 0% 1% 1.25% 1.5%

What is the Medicare Levy Exemption?

Every Australian resident has to pay a Medicare levy that amounts to 2% of their taxable income. However, it is possible to qualify for a reduction or exemption.

 

Nonresidents

First of all, if you are a nonresident for tax purposes, you do not need to pay the Medicare levy.

 

Residents

If you are an Australian resident, you may be able to pay a reduced Medicare levy if your income is between $21,980 and $27,475. Slightly higher thresholds apply to taxpayers who qualify for the senior Australians tax offset and the pensioner tax offset if your income if between $34,758 and $43,447.

 

If your taxable income is equal to or less than the lower threshold amount ($21,980) you may be exempt from the Medicare levy entirely.