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15 Feb 12 Health Insurance and Medicare Levy Surcharge Bills passed by House

On 15 February 2012, the House of Representatives passed the following 3 Bills with Government amendments (broadly relating to commencement dates):

For a copy of the Explanatory Memorandum, go here

For a copy of the Supplementary Explanatory Memorandum, go here

The Fairer Private Health Insurance Incentives Bill 2011 amends the Age Discrimination Act 2004, Income Tax Assessment Act 1936, Income Tax Assessment Act 1997, Private Health Insurance Act 2007, Taxation Administration Act 1953 and Taxation (Interest on Overpayments and Early Payments) Act 1983 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.

The Fairer Private Health Insurance Incentives (Medicare Levy Surcharge) Bill 2011 amends the Medicare Levy Act 1986 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.

The Fairer Private Health Insurance Incentives (Medicare Levy Surcharge - Fringe Benefits) Bill 2011 amends the A New Tax System (Medicare Levy Surcharge--Fringe Benefits) Act 1999 to increase the rate of Medicare levy surcharge for taxpayers who do not have complying health insurance and whose income (including reportable fringe benefits) for surcharge purposes is above the relevant Medicare levy surcharge threshold.

From 1 July 2012, three new private health insurance incentive tiers will apply. The new thresholds, amount of rebates and surcharge rates for each tier are as follows.

Tier 1 will apply to singles with an income of more than $80,000 a year and couples and families with an income of more than $160,000. For these people the private health insurance rebate (currently 30%) will be 20% for those up to 65 years, 25% for those aged 65 to 69, and 30% for those aged 70 and over.

The Medicare levy surcharge for people in this tier who do not hold appropriate private health insurance will remain at 1%.

Tier 2 applies to singles earning more than $93,000 a year and couples and families earning more than $186,000. The rebate will be 10% for those up to 65 years, 15% for those aged 65 to 69, and 20% for those aged 70 and over. The surcharge for people in this tier who do not have appropriate private health insurance will be increased to 1.25% of income.

Tier 3 affects singles earning more than $124,000 a year and couples and families earning more than $248,000 a year. No private health insurance rebate will be paid for people who fall within the third tier and the surcharge for avoiding private health insurance will be increased to 1.5% of income for these people.

Annual indexation to average weekly earnings will apply to the tier income thresholds.

The Bills now proceed to the Senate.

 


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