The Crest of the Commonwealth of Australia Treasury Portfolio Ministers
Picture of Wayne Swan

Wayne Swan

Deputy Prime Minister and Treasurer

3 December 2007 - 27 June 2013

13 May 2008

NO.038

Increasing the Medicare Levy Thresholds

As part of its commitment to working families, the Rudd Government will make major changes to the Medicare levy surcharge (MLS) thresholds to help ease cost of living pressures for families on modest incomes.

The Government will dramatically increase the MLS thresholds for singles from $50,000 to $100,000 and those who are members of a family from $100,000 to $150,000, with effect from 1 July 2008.

The thresholds above which the MLS is payable if a taxpayer does not have appropriate private patient hospital cover have not changed since the MLS was introduced on 1 July 1997. However, over time this has meant families on modest incomes have had to find room in the family budget for the MLS. This measure by the Rudd Government will refocus the MLS on those with higher incomes who are better able to afford the MLS.

While increasing the MLS thresholds will have a negative revenue impact, as fewer taxpayers will be liable to pay the MLS, it is estimated that this impact will be more than offset by the reduction in Government expenditure on the private health insurance rebate. The overall impact on the Budget is a net saving in excess of $299 million over the next four years.

From the 2007-08 income year, the Rudd Government will also increase the Medicare levy low-income thresholds to $17,309 (from $16,740) for single people and to $29,207 (from $28,247) for those who are members of a family. The additional amount of threshold for each dependent child or student will also be increased to $2,682 (from $2,594). The increase in thresholds takes into account rising living costs for families as reflected in movements in the Consumer Price Index.

The Medicare levy low-income threshold for pensioners below Age Pension age will also be increased. From 1 July 2007, the threshold will rise to $22,922 (from $21,637). This increase will ensure that pensioners below Age Pension age do not pay the Medicare levy while they do not have an income tax liability.

This major change to the Medicare levy surcharge thresholds is another way that the Rudd Government is delivering for working families. The changes are in addition to hefty income tax cuts as well as the Government's 50 per cent Childcare Tax Rebate and 50 per cent Education Tax Refund.

13 May 2008