Blog Layout

What is the Medicare levy surcharge and when are you required to pay it?

The Medicare levy surcharge is designed to encourage people with higher incomes to take out private patient hospital cover. You may be liable for the Medicare levy surcharge if you exceed the relevant income threshold without an appropriate level of private health insurance.

The Medicare levy surcharge is additional to the Medicare levy. The Medicare levy is a tax Australians pay to cover the costs of our public health system (Medicare). The Medicare levy is 2% of your taxable income and automatically calculated and applied when you lodge your tax return. Typically, the Pay As You Go (PAYG) amount your employer withholds from your wages includes a portion to cover the Medicare levy. 


The Medicare levy surcharge is levied against an individual’s taxable income, on top of the Medicare levy, when they don’t have the appropriate level of private hospital cover. Below we’ve outlined the Medicare levy surcharge rates for the 2022-23 financial year.


Medicare levy surcharge (MLS) rates

For each additional child, the income threshold increases $1500.


While a couple’s combined income is used to determine whether the Medicare levy surcharge applies, the actual surcharge is applied individually based on each person’s taxable income. For example, if one partner earns below the low income threshold ($24,276 for 2022-23), they are not liable for the Medicare levy surcharge regardless of the combined income.


Should a taxpayer’s family circumstances change during the year (e.g., they marry or separate), the Medicare levy surcharge is calculated for each period separately, reflecting their circumstances at the time.


Paying the Medicare levy surcharge


When you lodge your tax return, if it’s determined you’re required to pay the Medicare levy surcharge, it will be combined with the Medicare levy and show as one item (Medicare levy and surcharge) on your notice of assessment.


Preparing your tax?


We know tax season can be a real headache, so we’re here to help. For accountants you can depend on for efficient and expert tax preparation, contact Ascent Accountants today. 



Need help with your accounting?

Find Out What We Do
March 14, 2025
If your business interacts with the public — whether through customers, suppliers, events, or onsite work — public liability insurance can protect you against claims for injury or property damage. This generally covers legal costs and compensation, and although it’s not legally required, being sued for negligence can be costly (and bad for your business rep), so it’s highly recommended.
March 14, 2025
Co-owning a property can be a practical and financially beneficial arrangement, but when circumstances change, sometimes one party needs to jump ship. Whether due to financial strain, health issues, relocation, relationship breakdown, or differing property goals, it’s not uncommon for one co-owner to buy out the other. While this process may seem straightforward, there are several financial and legal considerations to consider.
March 14, 2025
Most people who sell a property — especially if it’s their first time doing so — are surprised (and frustrated) at how complicated it can be. Expenses (expected and unexpected) are a big part of that — and there are numerous costs throughout the process. These include real estate agent fees, legal expenses, marketing costs, and property preparation. Understanding and anticipating these expenses beforehand can help ensure a smooth and well-prepared road ahead.
March 14, 2025
As an accounting firm, we understand the importance of structuring investments wisely. One key aspect that investors should carefully manage is their participation in Dividend Reinvestment Plans (DRPs). These plans can be a strategic way to grow an investment portfolio, but they also come with tax and record-keeping responsibilities can’t be overlooked.
February 13, 2025
Thinking of starting a business? Here’s what you need to know! Read our latest blog to learn six key things to consider before starting your business.
February 13, 2025
Donating to charity is a great way to give back, but did you know not all donations are tax-deductible? To claim a deduction, your donation must be made to a Deductible Gift Recipient (DGR), and can’t receive anything in return. Read our latest blog to learn what you can claim and how to maximise your tax return.
More Posts
Share by: