Bills Digest 77 1996-97 Medicare Levy Amendment Bill (No. 2) 1996


Numerical Index | Alphabetical Index

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

Passage History

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.

Purpose

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.

Background

The reader is referred to the Digest for the Private Health Insurance Incentives Bill 1996.

Main Provisions

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.

Contact Officer and Copyright Details

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 Copyright Act 1968, no part of this publication may be reproduced or transmitted in any form or by any means, including information storage and retrieval systems, without the prior written consent of the Parliamentary Library, other than by Members of the Australian Parliament in the course of their official duties.

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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