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04 Feb 10 3 Bills to implement three new "Private Health Insurance Incentive Tiers" passed by House

On 3 February 2010, the following Bills (introduced into Parliament on 19 November 2009) were passed by the House of Representatives without amendment:

  • Fairer Private Health Insurance Incentives Bill 2009 [No 2]
  • Fairer Private Health Insurance Incentives (Medicare Levy Surcharge) Bill 2009 [No 2]
  • Fairer Private Health Insurance Incentives (Medicare Levy Surcharge - Fringe Benefits) Bill 2009 [No 2]

An earlier set of Bills was refused a second reading in the Senate on 9 September 2009, resulting in their defeat. If defeated again, the Bills will become another double dissolution "trigger" for the Governement.

The 3 Bills are part of a package to reduce the amount of private health insurance rebate eligible taxpayers with complying private health insurance are entitled to when their income for surcharge purposes is above the relevant Medicare levy surcharge threshold and to increase the rate of Medicare levy surcharge for certain taxpayers who do not have complying health insurance and whose income for surcharge purposes is above the relevant Medicare levy surcharge threshold.

Specifically, the 3 new tiers are as follows:

Tier 1: singles with income for surcharge purposes of more than $75,000 per annum and couples/families with income for surcharge purposes of more than $150,000 per annum (based on current projections) and who hold a complying private health insurance policy, will have their private health insurance rebate reduced by 10 percentage points. The Medicare levy surcharge will remain at 1 per cent for those singles and couples/families that do not hold appropriate private health insurance.

Tier 2: singles with income for surcharge purposes of more than $90,000 per annum and couples/families with income for surcharge purposes of more than $180,000 per annum and who hold a complying private health insurance policy, will have their private health insurance rebate reduced by 20 percentage points. The Medicare levy surcharge will be increased by 0.25 percentage points for those singles and couples/families that do not hold appropriate private health insurance.

Tier 3: singles with income for surcharge purposes of more than $120,000 per annum and couples/families with income for surcharge purposes of more than $240,000 per annum and who hold a complying private health insurance policy, will no longer receive any private health insurance rebate. The Medicare levy surcharge will be increased by 0.5 percentage points for those singles and couples/families that do not hold appropriate private health insurance.

The Bills amend the ITAA 1936, ITAA 1997, Private Health Insurance Act 2007, Taxation Administration Act 1953, Taxation (Interest on Overpayments and Early Payments) Act 1983, the Medicare Levy Act 1986 and the A New Tax System (Medicare Levy Surcharge - Fringe Benefits) Act 1999.

The Bills now proceed to the Senate.

 


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