Bills Digest no. 153 2008–09
Fairer Private Health Insurance Incentives (Medicare
Levy Surcharge Fringe Benefits) Bill 2009
This Digest was prepared for debate. It reflects the legislation as
introduced and does not canvass subsequent amendments. This Digest
does not have any official legal status. Other sources should be
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Contact officer & copyright details
introduced: 27 May
House: House of Representatives
Sections 1 3 on Royal
Assent; Schedule 1 immediately after the commencement of Schedule 1
to the Fairer Private Health Insurance Incentives Act
relevant links to the Bill, Explanatory Memorandum and second
reading speech can be accessed via BillsNet, which is at http://www.aph.gov.au/bills/.
When Bills have been passed they can be found at ComLaw, which is
This Bill is one of three Bills
which propose changes to various Acts in order to implement a 2009
10 Budget initiative changing private health insurance incentives
and penalties. The
other two Bills are Fairer Private Health Insurance Incentives Bill
2009 and Fairer Private Health Insurance Incentives (Medicare Levy
Surcharge) Bill 2009. The Bills propose the introduction of three new Private
Health Insurance Incentive Tiers, so that those on higher incomes
receive a lower private health insurance rebate when they purchase
a complying health insurance policy, and face a higher Medicare
levy surcharge if they opt out of private health cover.
This Bill proposes amendments to A New Tax System (Medicare
Levy Surcharge Fringe Benefits) Act 2009 (ANTS (MLS) Act
1999). It proposes amendments to insert new definitions of
income threshold tiers for singles and families, and staggered
increases to the Medicare levy surcharge for those assessed as high
income earners so they are consistent with the proposed changes to
other Acts contained in the Fairer Private Health Insurance
(Medicare Levy Surcharge) Bill 2009 and the Fairer Private Health
Insurance Incentives Bill 2009.
The Medicare levy surcharge is an additional surcharge on
taxable income imposed on high-income earners who are eligible for
Medicare, but do not have appropriate private hospital insurance.
It is in addition to the 1.5 per cent Medicare levy.
The ANTS (MLS) Act 1999 determines whether an individual is
liable to pay the Medicare levy surcharge in respect to a
reportable fringe benefit they or their spouse may have.
The measures proposed in this and the other two Bills were
announced in a joint media release from the Treasurer, Wayne Swan,
and the Minister for Health and Ageing, Nicola Roxon on 12 May
2009, as part of the 2009 10 Budget.
The Bill has been referred to the Senate Economics Legislation
Committee, to report by 16 June 2009.
In itself, this Bill has not attracted commentary. However, it
is one of three Bills that propose changes to the private health
insurance rebate and Medicare levy surcharge. These proposals have
attracted commentary and debate. For an overview of this debate see
the Bills Digest prepared for the Fairer Private Health Insurance
Incentives Bill 2009.
Refer to the Bills Digest for the Fairer Private Health
Insurance Incentives Bill 2009.
Items 1, 4-6 propose to insert new definitions
for family tier 1 threshold, singles tier 1 threshold and tier 2
and tier 3 earners, so they are consistent with the definitions in
the Income Tax Assessment Act 1997.
Item 7 proposes to replace references to the
way a dependant child is defined. Instead of referring to the
meaning of a dependant child as given in the ITAA 1997, the meaning
of dependant is broadened to that which is defined in the ANTS
(MLS) Act 1999, in order to make the definition consistent with
Items 8, 10, 12, 14, 15 propose to replace all
references to singles surcharge threshold with singles tier 1
threshold and all references to family surcharge threshold are
replaced with family tier 1 threshold .
Items 9, 11, 13, 16 proposes new provisions
that increase the Medicare levy surcharge for someone assessed as
being a tier 2 or tier 3 earner. The surcharge is increased to 1.25
per cent and 1.5 per cent respectively.
Item 17 proposes that the amendments made in
the Schedule apply to the 2010 11 year of income and later
This Bill is one of three seeking to give effect to a 2009 10
Budget announcement intended to rebalance private health insurance
arrangements. This specific Bill proposes amendments to the A
New Tax System (Medicare Levy Surcharge Fringe Benefits) Act
2009 that will make it consistent with the provisions proposed
in the other two Bills. As the Opposition has indicated it opposes
the overall measure, it will require the support of the Greens and
the Independents to pass the Senate.
Members, Senators and Parliamentary staff can obtain further
information from the Parliamentary Library on (02) 6277
5 June 2009
Bills Digest Service
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