Nov 24, 2023 Andrew Low

Medicare Levy Exemption? Don’t Delay

For most Australian tax residents, the Medicare Levy is just something that we accept as a part of everyday life – a small price to pay to access one of the best public healthcare systems in the world. Taxed at generally 2% of an individual’s taxable income, the Levy may not be the largest of amounts, however there are certain categories of individuals that may not need to pay the Levy.

Individuals may be exempt from the Medicare Levy if they fall into three main categories:

Medical exemption

An individual may be able to claim a full or half Medicare Levy exemption if both of the following conditions are satisfied:

  • One of the following Category 1 medical conditions applied during all or part of the income year:
    • You were a blind pensioner
    • You were entitled to full free medical treatment for all conditions under either Defence Force arrangements or the Veterans’ Affairs Repatriation Health Card
  • During the period you met one of the above conditions, you also met the relevant conditions relating to dependents. The definition for Medicare Levy purposes is slightly expanded to include both dependent children, but also spouses.

Foreign resident exemption

An individual may be able to claim a full exemption if they were a foreign tax resident for the full income year. If they were a foreign tax resident for only part of the year, a full exemption may still apply subject to certain conditions relating to their dependents.

Not entitled to Medicare Benefits

An individual may be able to claim a full exemption for any period that they have a Medicare Entitlement Statement (MES) showing they were not entitled to Medicare benefits because they were a temporary resident for Medicare purposes (also subject to dependent conditions) or were a member of a diplomatic mission or consular post in Australia.

The MES is an important document to hold to substantiate the eligibility for the Medicare Levy exemption, but typically takes about 8 weeks to receive after the initial application. Services Australia is currently experiencing processing delays for 2023 MES applications, however it doesn’t mean that you need to delay lodging your tax return, especially if your due date was 31st October. As long as you apply for a 2023 MES before 17 March 2024 (also needs to be applied for before lodging your tax return), you can still complete the Medicare Levy exemption question as though you have your statement.

Think you may qualify for the exemption or not sure where to start? Feel free to reach out to us and we can guide you through the process.

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