helenmaine

Q about tax......

As "high" earners, we have to pay the 1% medicare levy. I am trying to sort out private health care at the moment for me and my hubby to avoid this and I was wondering how it worked, specifically:

Once the private heath cover is sorted, does the 1% get automatically deducted anyway and then you have to claim it back on your tax return ? or do you inform the tax people that you have health cover and the deduction is not taken?

Also, does anyone have good recommendations for health insurance providers? I have checked out NIB and they seem quite good.

Cheers

HiddenPaw

as high earners, you pay the 'Medicare Levy Surcharge'...which is 1% on top of the 1.5% you already pay as a Medicare Levy ...if that makes sense. If you got private healthcare, you would be exempt from the 1% surcharge but still pay the 1.5% levy. (Not sure if you already had factored that in...I was just differentiating between the levy and the surcharge

Sorry, cant answer the rest !!

helenmaine

Thanks for the clarification - it was the surcharge that I was referring to. ....

Your baby is really cute btw

jayr

Are you sure you need to pay it? Even if your gross salary is over $100,000, you may have salary sacrficed enough to bring your taxable income below the threshold and thus avoid the extra 1% levy.

helenmaine

Can you clarify this? I was under the impression that it you earned more than 110K per couple then the 1% was automatically deducted.

Cheers

jayr

I'll try. Whilst my gross income would mean I should pay the levy, I have a number of things salary sacrificed including car lease, petrol and also Living Away From Home Allowance (LAFHA), being a temporary resident.

Each of these comes out of gross salary and is not subject to income tax, some elements instead attracing Fringe Benefits Tax (FBT). Because the gross amounts of these bring my remaining cash salary below $110k I am not subject to the 1% levy and don't bother with private medical insurance to offset the surchage.

Here's a link with a bit more on salary sacrificing:

http://www.careerone.com.au/resource...-22547,00.html

JAJ

Your health insurance provider gives you a certificate saying you've had eligible health cover for x days (out of 365) of the financial year.

There's a box to enter this on your tax return, and the Medicare levy surcharge is (365-x)/365*1% of your income. Alan Collett will correct me if my formula's wrong.

You don't pay the surcharge in advance - it's collected as part of your tax assessment.

Jeremy

John Howard

You will also get a 30% discount off the cost of private MI. You can either take this off your yearly premium or claim it back on your tax return. Its the goverments way of getting more people to go private.