Save Search

Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
Fairer Private Health Insurance Incentives (Medicare Levy Surcharge-Fringe Benefits) Bill 2011



Download PDFDownload PDF

ISSN 1328-8091

Parliament of Australia Departmentof Parliamentary Services

Contents

Purpose .................................................................................................................................................... 2

Background .............................................................................................................................................. 2

Basis of policy commitment ................................................................................................................ 3

Position of major interest groups ....................................................................................................... 3

Financial implications ............................................................................................................................... 3

Key provisions .......................................................................................................................................... 3

Schedule 1—Amendments to the A New Tax System (Medicare Levy Surcharge—Fringe Benefits) Act 1999 ....................................................................................................................... 3

Concluding comments ............................................................................................................................. 4

BILLS DIGEST NO. 23, 2011-12 22 August 2011

Fairer Private Health Insurance Incentives (Medicare Levy Surcharge-Fringe Benefits) Bill 2011

Amanda Biggs Social Policy Section

2 Fairer Private Health Insurance Incentives (Medicare Levy Surcharge-Fringe Benefits) Bill 2011

Warning: All viewers of this digest are advised to visit the disclaimer appearing at the end of this document. The disclaimer sets out the status and purpose of the digest.

Fairer Private Health Insurance Incentives (Medicare Levy Surcharge-Fringe Benefits) Bill 2011

Date introduced: 7 July 2011

House: House of Representatives

Portfolio: Treasury

Commencement: At the same time as Schedule 1 to the Fairer Private Health Insurance Incentives Act 2011 commences.

Links: The links to the Bill, its Explanatory Memorandum and second reading speech can be found on the Bill's home page, or through http://www.aph.gov.au/bills/. When Bills have been passed and have received Royal Assent, they become Acts, which can be found at the ComLaw website at http://www.comlaw.gov.au/.

Purpose

The Fairer Private Health Insurance Incentives (Medicare Levy Surcharge—Fringe Benefits) Bill 2011 proposes amendments to the A New Tax System (Medicare Levy Surcharge—Fringe Benefits) Act 1999, (ANTS (MLS) Act 1999), that would introduce new income tier thresholds to apply to families and singles. These income tiers would determine the amount of Medicare Levy Surcharge (MLS) in respect of reportable fringe benefits, for which an income earner would be liable.

This is one of three Bills that propose to implement a 2009 Budget initiative that aims to rebalance incentives and penalties around the purchase of private health insurance by higher income earners. The proposed amendments in this Bill would make them consistent with the proposed amendments in the Fairer Private Health Insurance Incentives Bill 2011 and the Fairer Private Health Insurance Incentives (Medicare Levy Surcharge) Bill 2011.

Background

The MLS is a one per cent additional surcharge on taxable income, imposed on higher income earners who decide not to purchase appropriate private health insurance. The ANTS (MLS) Act 1999 determines whether an individual is liable to pay the Medicare levy surcharge in respect to a reportable fringe benefit they or their spouse may have.

Fairer Private Health Insurance Incentives (Medicare Levy Surcharge-Fringe Benefits) Bill 2011 3

Warning: All viewers of this digest are advised to visit the disclaimer appearing at the end of this document. The disclaimer sets out the status and purpose of the digest.

Basis of policy commitment

The amendments proposed in this Bill were announced as part of the 2009-10 Budget.1

Position of major interest groups

This Bill of itself has not attracted particular commentary. However, the budget measure to change the incentives and penalties around the purchase of private health insurance for those on higher incomes, as proposed in this suite of Bills, has been contentious. The Bills Digest for the Fairer Private Health Insurance Incentives Bill 2011 provides background and further detail.

Financial implications

Refer to the Bills Digest for the Fairer Private Health Insurance Incentives Bill 2011.

Key provisions

Schedule 1—Amendments to the A New Tax System (Medicare Levy Surcharge—Fringe Benefits) Act 1999

Items 1 and 2 propose a new definition for family tier 1 threshold in line with the meaning contained in the Private Health Insurance Act 2007.

Items 3 and 4 propose a new definition of singles tier 1 threshold in line with the meaning contained in the Private Health Insurance Act 2007.

Items 5 to 7 propose meanings for a tier 2 earner and a tier 3 earner that are in line with the Private Health Insurance Act 2007, and specifies that a dependent will be defined in line with the ANTS (MLS) Act 1999.

Items 8, 10, 12, 14, 15 propose to replace all references to ‘singles surcharge threshold’ with ‘the person's singles tier 1 threshold’ and all references to ‘family surcharge threshold’ with ‘family tier 1 threshold'.

Items 9, 11, 13, 16 propose new provisions that increase the Medicare levy surcharge for someone assessed as being a tier 2 or tier 3 earner. The surcharge is increased by 0.25 per cent and 0.5 per cent respectively.

1. W Swan (Treasurer), N Roxon (Minister for Health and Ageing), Rebalancing support for private health insurance, media release, Canberra, 12 May 2009, viewed 8 August 2011, http://www.health.gov.au/internet/budget/publishing.nsf/Content/budget2009-hmedia13.htm

4 Fairer Private Health Insurance Incentives (Medicare Levy Surcharge-Fringe Benefits) Bill 2011

Warning: All viewers of this digest are advised to visit the disclaimer appearing at the end of this document. The disclaimer sets out the status and purpose of the digest.

Item 17 proposes the amendments apply to the 2011-12 and later years of income.

Item 18 proposes transitional provisions to apply to the 2011-12 year of income.

Concluding comments

This Bill is one of three that propose to give effect to a 2009-10 Budget initiative to alter the financial incentives and penalties around the purchase of private health insurance. This particular Bill proposes amendments to the A New Tax System (Medicare Levy Surcharge—Fringe Benefits) Act 1999 that will make it consistent with the provisions proposed in the other two Bills.

Fairer Private Health Insurance Incentives (Medicare Levy Surcharge-Fringe Benefits) Bill 2011 5

Warning: All viewers of this digest are advised to visit the disclaimer appearing at the end of this document. The disclaimer sets out the status and purpose of the digest.

© Commonwealth of Australia

Creative Commons

With the exception of the Commonwealth Coat of Arms, and to the extent that copyright subsists in a third party, this publication, its logo and front page design are licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Australia licence.

In essence, you are free to copy and communicate this work in its current form for all non-commercial purposes, as long as you attribute the work to the author and abide by the other licence terms. The work cannot be adapted or modified in any way. Content from this publication should be attributed in the following way: Author(s), Title of publication, Series Name and No, Publisher, Date.

To the extent that copyright subsists in third party quotes it remains with the original owner and permission may be required to reuse the material.

Inquiries regarding the licence and any use of the publication are welcome to webmanager@aph.gov.au.

Disclaimer: Bills Digests are prepared to support the work of the Australian Parliament. They are produced under time and resource constraints and aim to be available in time for debate in the Chambers. The views expressed in Bills Digests do not reflect an official position of the Australian Parliamentary Library, nor do they constitute professional legal opinion. Bills Digests reflect the relevant legislation as introduced and do not canvass subsequent amendments or developments. Other sources should be consulted to determine the official status of the Bill.

Feedback is welcome and may be provided to: web.library@aph.gov.au. Any concerns or complaints should be directed to the Parliamentary Librarian. Parliamentary Library staff are available to discuss the contents of publications with Senators and Members and their staff. To access this service, clients may contact the author or the Library‘s Central Entry Point for referral.

Members, Senators and Parliamentary staff can obtain further information from the Parliamentary Library on (02) 6277 2514.