Question

Calculate the Medicare levy and Medicare levy surcharge payable for the year ended 30 June 2018 for the following taxpayers:

(a) An Australian resident, aged 25 years, with a taxable income of $18,000.

(b) An Australian resident, eligible for a Seniors tax offset, with a taxable income of $32,000. (c) An Australian resident, aged 45 years, with a taxable income of $45,000.

(d) A taxpayer who is not a resident for tax purposes, with a taxable income of $45,000.

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(e) ) An Australian company with a taxable income of $2,500,000.

(f) An Australian resident, aged 45 years, with a taxable income of $110,000, holding private health insurance.

(g) An Australian resident, aged 45 years, with a taxable income of $110,000, and no private health insurance.

(h) An Australian resident with a taxable income of $150,000, holding private health insurance for 90 days of the income year.

(i) Victor and his wife are Australian residents. Victor has a taxable income of $110,000 and his wife Jackie a taxable income of $75,000. They have no children and no private health insurance.

(j) An Australian couple have four children and no private hospital health insurance. What would be the family’s minimum Medicare levy surcharge threshold?

Answer 1

An Australian resident, aged 25 years, with a taxable income of $18,000.

As per the applicable provisions for a resident individual, if the taxable income of the resident individual is equal to or less than $21,655, then you are not required to pay Medicare Levy and thereby medicare levy surcharge will also not be applicable.
Hence in the above case no Medicare Levy is payable by the resident.   

An Australian resident, eligible for a Senior Tax Offset, with a taxable income of $32,000.

As per the applicable provisions for a resident individual, eligible for a “Senior Tax Offset”, if the taxable income of the resident individual is equal to or less than $34,244, then you are not required to pay Medicare Levy and thereby medicare levy surcharge will also not be applicable.
Hence in the above case no Medicare Levy is payable by the resident.
   

An Australian resident, aged 45 years, with a taxable income of $45,000

As per applicable income tax provisions for a resident individual, if the taxable income of the resident individual is more than $21,655, then you are required to check whether you fall under following 3 categories at any time in to qualify for exemption.
:- medical
:- foreign resident and resident of Norfolk Island
:- not entitled to Medicare benefits

If you do not get exemption then you are required to pay Medicare Levy of 2% on the Taxable income and medicare levy surcharge if taxable income exceeds $90,000 (in case of singles)
Here in this case Medicare Levy would be
= $45,000*2%

= $900

However no Medicare Levy Surcharge would be applicable as the Taxable Income is below $90,000.Hence in the above case no Medicare Levy Surcharge is payable by the resident.
{This case is solved by taking assumption that assessee is single with no dependants}  

A taxpayer who is a non resident for tax purpose, with a taxable income of $45,000.

As per applicable income tax provisions, if you are not an Australian resident for tax purpose then you are exempt from the Medicare levy and thereby with Medicare Levy Surcharge also.
Hence no Medicare Levy and Medicare Levy Surcharge is payable by the non-resident

An Australian company with a taxable income of $2,500,000.

As per the applicable income tax provisions, Australian Individual resident taxpayers are required to pay the Medicare levy and thereby with Medicare Levy Surcharge also.
Hence no Medicare Levy and Medicare Levy Surcharge would be payable by the company.

An Australian resident, aged 45 years, with a taxable income of $110,000, holding private health insurance.

As per the a applicabl income tax provisions for a resident individual, if the taxable income of the resident individual is more than $21,655 then you are required to pay 2% on the Taxable income and medicare levy surcharge if taxable income exceeds $90,000 (in case of singles). However, here in this case as the individual is holding private health insurance he is not required to pay medicare levy surcharge.

Here in this case Medicare Levy would be
= $110,000*2%

= $2200

An Australian resident, aged 45 years, with a taxable income of $110,000, holding private health insurance.

As per the a applicable income tax provisions for a resident individual, if the taxable income of the resident individual is more than $21,655 then you are required to pay 2% on the Taxable income and medicare levy surcharge if taxable income exceeds $90,000 (in case of singles). However, here in this case as the individual is not holding private health insurance he is required to pay medicare levy surcharge.

Medicare Levy would be:-	Medicare Levy Surcharge would be:-
$= $110,000*2%	= ($110,000)*1.25% {Tier 2 ($105,001 - $140,000)}
= $2200	= $1,375

An Australian resident with a taxable income of $150,000, holding private health insurance for 90 days of the income year.

As per the a applicable provisions income tax provisions a resident individual, if the taxable income of the resident individual is more than $21,655 then you are required to pay 2% on the Taxable income and medicare levy surcharge if taxable income exceeds $90,000 (in case of singles). However, here in this case as the individual is holding private health insurance for 90 days he will be eligible for partial exemption on medicare levy surcharge.

Medicare Levy would be:-	Medicare Levy Surcharge would be:-
$= $150,000*2%	= (($150,000*1.50%)*275)/365 {Tier 3 - more than $140,000 – rate 1.5%)}
= $3000	= $1,695

Victor and his wife are Australian residents. Victor has a taxable income of $110,000 and his wife Jackie has taxable income of $75,000. They have no children and no private health insurance.

As per the definition of dependent for Medicare levy exemption purpose, Dependent means a spouse and dependent children below the age of 21 years.
Hence, Victor will be liable to pay the Medicare Levy of 2%, which is calculated as follows :-

= $110,000*2%
= $2,200

As per the definition of dependent for Medicare levy surcharge purpose, Dependent are your spouse and dependent children below the age of 21 years and full time students between the age of 21-24 years. The Base Income Threshold for Families is $180,000 as the family income stands at $185,000, the Medicare levy surcharge will be 1% of the total income, which calculated as follows:-
= $110,000*1%                                                                        = $75,00*1%
= $1,100 Payable by Victor                                                   = $75 Payable by Jackie.

An Australian couple have four children and no private hospital heath insurance. What would be the family’s minimum Medicare Levy Surcharge threshold?

As per the definition of dependent for Medicare levy surcharge purpose, Dependent are your spouse and dependent children below the age of 21 years and full time students between the age of 21-24 years. The Base Income Threshold for Families is $180,000, however you will not be required to pay Medicare levy surcharge if family income exceeds the threshold but your own income for Medicare levy surcharge purpose is less than $21,655.
However, Family income Threshold is increased by $1,500 for each dependent child after 1^st child.
Hence, here in this case the Family Income Threshold will be :-
= $180,000 + $1,500*3
= $187,500.