If you have chosen to receive a private health insurance rebate as a reduction in the cost of your premiums in recent years, You will need to know about the changes the Australian Government has made to this rebate from next financial year.

As a result of these changes, your entitlement to private health insurance rebate may decrease.

What are the changes?

From 1 July 2012, your entitlement to a private health insurance rebate will be income tested.

The new income thresholds and rebate entitlements will be:



$0 – $84,000

$84,001 – $97,000

$97,001 – $130,000

$130,001 and above


$0 – $168,000

$168,001 – $194,00

$194,001 – $260,000

$260,001 and above



Tier 1

Tier 2

Tier 3

Aged under 65





Aged 65 – 69





Aged 70 or over












* The families’ threshold is increased by $1,500  for each dependent child after the first.
   Families include couples and single parent families.

Your rebate entitlement will be calculated based on your income for Medicare levy surcharge purposes when you lodge your 2013 income tax return.

If you receive less rebate than what you are entitled to, the difference owed to you will be refunded.

If you have claimed too much rebate, the liability will be collected via your income tax assessment

Will you be affected?

If your income for Medicare levy surcharge purposes is greater than the first income threshold (see table above) in the 2012-13 financial year, the level of rebate you are entitled to may decrease.

 Next steps

You do not have to do anything, but if you want to minimise the likelihood of having a tax liability, you can choose to adjust the amount of rebate you receive during the year. You can do this by contacting your insurer and nominating a rebate tier to apply to your policy. There is no penalty for making an incorrect nomination to your insurer.

 If you do not maintain an appropriate level of private patient hospital cover, you may become liable for Medicare levy surcharge. The Medicare levy surcharge rates will increase from 1 July 2012 as shown in the table above.


Some private health insurers are offering members the facility to pre-pay their premiums up to
31 December 2013 so they will be eligible for the 30% rebate until then regardless of what their
income is or will be. To enroll for this once off benefit, You will have to act fast as it closes on
30 June 2012.

More information on income for Medicare levy surcharge purposes and the private health insurance rebate can be found on the ATO’s website, www.ato.gov.au/privatehealthinsurance

If you have any questions, please phone them 13 28 61 between 8.00am and 6.00pm, Monday to Friday and be prepared to hold on for some time. Otherwise, please post your enquiry at http://www.taxwise-australia.com/taxinfo.html


Professional Fees for Professional Services

by Warren Kruger on June 10, 2012

In a recent survey to clients we asked for a comment regarding the fees billed to them. One particular client suggested we revert to invoicing on an hourly rate.

I intend demonstrating why this will be a detrimental move.

However, to do this, I have to make some assumptions.

  • A graduate accountant (GA) will not work for less than $60 per hour
  • Professional accounting bodies recommend a mark up of 150% to cover overhead expenses – this means the GA will be billed out at $150 per hour
  • Average amount invoiced for 1 tax return  is $222 including GST (No investment properties, No ABN and No capital gains)

We have 3 scenarios to prove billing at an hourly rate will place the client in a worse position than being charged for the procedure.

Scenario 1: Home or Office Visit (8am to 8pm, 7 days a week)

  • Travel time to client – 30 minutes – $75.00
  • Tax Preparation – 1 Return – 1 Hour $150.00
  • Travel time to base – 30 minutes – $75.00
  • Motor Vehicle Costs – 25kms – $25.00
  • Registered Tax Agent Review – 15 minutes - $55.00
  • Sub Total – $380.00
  • GST 10% x $380 = $38.00
  • Total – $418.00

By being billed for the procedure there will be a $196.00 saving.

Scenario 2: At Taxwise Office (9am to 5pm weekdays only)

  • Time taken off work – 3 hours – $150.00
  • Tax preparation – 1 Return – 1 Hour $150.00
  • Client’s motor vehicle costs – 25 kms – $25.00
  • Registered Tax Agent Review – 15 minutes – $55.00
  • Sub Total – $380.00
  • GST 10% x $205.00 = $20.00
  • Total – $400.00

By being billed for the procedure there will be a $178.00 saving or could be as much as $578.00 should an additional visit be necessary because of missing data and information.

Scenario 3: What the competition will cost you (again during normal business hours)

  • Time taken off work – 3 hours – $150.00
  • Tax preparation – 30 minutes maximum – $120.00
  • Clients motor vehicle costs – 25kms – $25.00
  • Total – $295.00

The tax preparer, in most cases, is NOT a graduate accountant, but has only received a few hours in-house training. There is also a minute chance you’ll have the same tax preparer next year.

By billing for the procedure will save you $73.00

So, as you can see, it is definitely in your favour to be billed for the procedure rather than hourly based fees.



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