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25 May 12 On Medicare Levy Surcharge changes

MEMBER 120 writes:

"In October 2009 a public announcement was advised on proposed changes to Medicare Levy Surcharge but it was not passed by Parliament until April 2012. This has caused a number of concerns with our clients. I believe that The Tax Institute should consider an appeal on the timing issue of this Bill. That is, when a husband and wife are both covered in their private health fund, and they have a baby during the year ending 2009/2010 or after, and if the private health fund is not notified of the additional dependent (it does not cost extra in premium) then the ATO is charging the surcharge on the parent who exceeds the cap amount by the ML surcharge on the whole amount from the date of birth.

The issue here is:

  • Private funds not notifying their client of the change
  • The ATO not notifying the taxpayer that they are liable for the surcharge
  • That the law is being made by a press release and back dating the changes to that date implicates a further three years penalty if the taxpayer has not notified their private health fund
  • That the taxpayer took out private health fund to avoid a surcharge and this is ridiculous that they get charged for a dependant who is not earning any money that their existing cover does not allow an exemption on their hospital cover for the additional dependent. This is a sling at women having children.

What is being done about this unfair tax?

Who is at fault, the private health fund or is this just a revenue raising loophole for them?

What did the industry bodies do about getting the start date changed to the date that the legislation was passed?"

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