During the course of the past few months, I was amazed at the number of Clients that do not have this kind of cover. So why is it so important from the point of view of a Tax Return ?
Taxpayers who do not have adequate private hospital insurance are liable for an additional tax of 1% – called the Medicare Levy Surcharge. It is imposed on the entire taxable income and is imposed for that part of an income year where there is inadequate hospital cover.
Where an unmarried, single taxpayer’s taxable income is $50,000 or more and there is no private hospital cover, a minimum of $500 in extra tax will become payable. For a married person or an unmarried person with dependant children, the threshold is $100000 combined taxable income of both partners/spouses. This means that a minimum of $1,000 in additional tax will be payable.
Now the funny thing is that the cost of private hospital insurance is less than the additional tax payable. For example. if you are aged 30 or less, this insurance can cost as little at $360 per year. So the result is that you would be ‘buying money’.
How do you avoid paying the Medicare Levy Surcharge ?
Ensure that your taxable income is under $50,000 if you are single or under $100,000 for you and your partner/spouse. Take out a policy of private hospital cover with any of the private health insurers/funds such as HBF, MediBank Private etc.
What kind of insurance do you need ?
If private hospital insurance is all the cover you need, request a policy that will enable you to enter the letter H on your tax return. Advise the health fund that you want the cheapest method to put the letter H on your tax return.
As mentioned above, the medicare levy surcharge is imposed on a daily basis. So every day that you do not have the letter H on your tax return, means a day that you will be liable to pay the extra tax.
In conclusion, if you fall into the income brackets where the medicare levy surcharge is payable and you do not have private hospital insurance, call any of the private health funds, without delay, and Start Buying Money.
About The Author
Warren Kruger is an Australian Tax Specialist and Advisor. For a FREE Report "7 Essential Strategies to Reduce Your Taxation NOW!" Sign Up RIGHT NOW in the above right Opt In Box
About The Author
Warren Kruger is an Australian Tax Specialist and Advisor. For a FREE Report “7 Essential Strategies to Reduce Your Taxation NOW!”,enter your name and email address in the Opt In Box located on the top right hand side of this article.
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