WARNING:
This Digest is prepared for debate. It reflects the legislation as
introduced and does not canvass subsequent amendments.
This Digest was available from 31 January 1997.
CONTENTS
Medicare Levy Amendment Bill (No. 2) 1996
Date Introduced: 13 December 1996
House: House of Representatives
Portfolio: Treasury
Commencement: The increases in the Medicare levy
exemption thresholds outlined in this Digest commence
retrospectively on 1 July 1996 and apply for the 1996-97 year of
income. The proposed increases in the Medicare levy commence on 1
July 1997.
The major amendments proposed by the Bill impose an additional
1% Medicare levy on individuals with gross taxable incomes
exceeding than $50 000 and families with combined gross taxable
incomes exceeding $100 000 who are not covered by a private health
insurance policy that provides hospital cover. The Bill also
increases the income thresholds below which the Medicare levy is
not payable.
The reader is referred to the Digest for the Private Health
Insurance Incentives Bill 1996.
Schedule 1 Amendments
The major amendments increase the Medicare levy exemption
thresholds.
Item 1 of Schedule 1 increases from $12 870 to
$13 127 the Medicare levy exemption threshold in respect of an
individual.
Under subsection 7(2) of the Medicare Levy Act 1986
(the MLA) where the taxable income of a person exceeds $12 870 but
not $13 913, the amount of Medicare levy payable is not to exceed
20% of the difference between the two figures. Item 2 of
Schedule 1 will increase the upper amount to $14 346 (This
will fall to $14 191 from 1 July 1997 reflecting the removal of the
'guns levy' - Part 2 of Schedule 1).
Item 4 of Schedule 1 increases the level of the
family income threshold from $21 718 to $22 152.
Schedule 2 Amendments
The major amendments, which are inserted in the MLA by
item 4 of Schedule 2, increase the Medicare levy
by 1% for the following persons:
Proposed section 8B (Single person without
dependants) - A person who:
- is not a married person;
- does not have any dependants;
- is not covered by an insurance policy that provides private
patient hospital cover;
- is not a prescribed person (A full or partial exemption
from the Medicare tax is provided to a taxpayer who qualifies as a
prescribed person under the Income Tax Assessment Act 1936 (ITAA)
The main categories of prescribed person are defence personnel,
persons entitled under veterans' entitlement legislation and blind
pensioners and sickness beneficiaries.); and
- has a taxable income exceeding $50 000.
Proposed section 8C (Person with
dependants who is not married) - A person who:
- is not a married person;
- has one or more dependants;
- is not, or at least one of their dependants (other than a
dependant who is, or would, apart from subsection 251U(2) of the
ITAA (ie. under subsection 251U(2) a person is not to be taken
to be a prescribed person unless every person who was their
dependant was a prescribed person), be taken to be a
prescribed person) is not, covered by an insurance policy that
provides private patient hospital cover; and
- has a taxable income exceeding $100 000.
Proposed section 8D (Person who is married) - A
person who:
- is married;
- is, or at least one of their dependants (other than a dependant
who is, or would apart from subsection 251U(2) of the ITAA (see
above) be taken to be a prescribed person) is not covered by an
insurance policy that provides private patient hospital cover;
- is not , or is taken under section 251VA of the ITAA (ie.
the effect of section 251VA, which is to be inserted in the ITAA by
item 4 of the Taxation Laws Amendment (Private Health Insurance
Incentives) Bill 1996, is to deem a prescribed person with
dependants who are not prescribed persons, not to be a prescribed
person.) not to be a prescribed person; and
- along with their spouse has a combined taxable income exceeding
$100 000.
Proposed section 8E (Person who is a beneficiary of a
trust estate and without dependants and not married) - A
person who:
- is a beneficiary of a trust;
- proposed section 8B (see above) applies to;
- the trustee of the estate is liable to be assessed under
section 98 of the ITAA for a share of the net income of the estate
to which the beneficiary is entitled; and
- income from the trust exceeds $50 000.
Proposed section 8F (Person who is a beneficiary of a
trust estate and with dependants and not married) - A
person who:
- is a beneficiary of a trust;
- proposed section 8C (see above) applies to;
- the trustee of the estate is liable to be assessed under
section 98 of the ITAA for a share of the net income of the estate
to which the beneficiary is entitled; and
- income from the trust exceeds $100 000.
Proposed section 8G (Person who is a beneficiary of a
trust who is married) - A person who:
- is a beneficiary of a trust;
- proposed section 8D (see above) applies to;
- the trustee of the estate is liable to be assessed under
section 98 of the ITAA for a share of the net income of the estate
to which the beneficiary is entitled;
- along with their spouse has a combined taxable income exceeding
$100 000; and
- income from the trust exceeds $13 127.
Taxable and trust income amounts are pro-rata'd according to the
period for which a person is subject to the above provisions.
Ian Ireland Ph. 06 277 2438
24 January 1997
Bills Digest Service
Information and Research Services
This Digest does not have any official legal status. Other
sources should be consulted to determine whether the Bill has been
enacted and, if so, whether the subsequent Act reflects further
amendments.
IRS staff are available to discuss the paper's contents
with Senators and Members and their staff but not with members of
the public.
ISSN 1323-9031
© Commonwealth of Australia 1996
Except to the extent of the uses permitted under the
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Published by the Department of the Parliamentary Library,
1997.
This page was prepared by the Parliamentary Library,
Commonwealth of Australia
Last updated: 6 March 1997
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