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Tax Laws Amendment (Medicare Levy Surcharge Thresholds) Bill 2008

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2008

 

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

 

 

 

SENATE

 

 

 

Tax laws amendment (medicare levy surcharge thresholds) bill 2008

 

 

 

SUPPLEMENTARY EXPLANATORY MEMORANDUM

 

 

 

Amendments to be moved on behalf of the Government

 

 

(Circulated by the authority of the

Treasurer, the Hon Wayne Swan MP)



T able of contents

General outline and financial impact............................................................ 5

Chapter 1            Medicare levy surcharge thresholds................................ 7



Medicare levy surcharge thresholds

Schedule 1 to the Bill increases the Medicare levy surcharge thresholds for singles and families.  The Medicare levy surcharge imposes a 1 per cent increase in Medicare levy liability on certain individuals who do not have private patient hospital insurance.

These amendments make changes to Schedule 1 to the Bill.  The singles surcharge threshold will be $75,000 for the 2008-09 year of income.  In subsequent income years it will be indexed annually in line with movements in full-time adult average weekly ordinary time earnings.

The family surcharge threshold will be an amount equal to double the singles surcharge threshold for the year of income.  In the 2008-09 income year the family surcharge threshold will be $150,000.

Transitional arrangements are also put in place to ensure that taxpayers are not disadvantaged by the changes.

Proposal announced :  The amendments have not previously been announced.

Financial impact The amendments in relation to the Medicare levy surcharge thresholds will have these financial implications:

2008-09

2009-10

2010-11

2011-12

-$102.7m

$37.5m

$57.1m

$62.7m

Compliance cost impact :  Negligible.



C hapter 1     

Medicare levy surcharge thresholds

Amendments 1, 4, 5, 7 and 8 — new calculation of singles surcharge threshold

1.1                   The singles surcharge threshold will be $75,000 for the 2008-09 year of income.  In subsequent years of income this amount will be indexed annually in line with movements in full-time adult average weekly ordinary time earnings.

1.2                   The singles surcharge threshold will be increased in multiples of $1,000 (rounded down). 

Amendments 2, 3 and 6 — new calculation of family surcharge threshold

1.3                   In the 2008-09 year of income the family surcharge threshold will be $150,000.  Going into the future, the family surcharge threshold will be an amount equal to double the singles surcharge threshold for the year of income.

1.4                   If a person has two or more dependents who are children, the family surcharge threshold will increase by an amount equal to double the singles surcharge threshold for the year of income plus $1,500 for each child after the first. 

Amendment 9 — additional application provision

1.5                   Transitional arrangements are put in place to ensure individuals or families are not disadvantaged by the amendments in the Bill.  Under the arrangements as long as the taxpayer obtains appropriate private patient hospital cover before 1 January 2009, they will avoid the Medicare levy surcharge for the period 1 July to 31 December 2008.