Medicare Surcharge

[willy1111]

Hi everyone,

My partner and I have just lodged our 06 tax returns (lodged before 31 March but just received the Assessment Notice from the ATO).

And it seems that they have not charged either of us the Medicare Surcharge. We earn well inexcess of $100K as a couple and don't have private health cover.

The accountant appears to have completed the tax returns correctly but for some reason the ATO hasn't picked it up.

What I want to know is. . . should I just so tough luck to the ATO as it was their mistake and do nothing. . . or should I relodge an amended return and pay the surcharge.

What would others do?

And does anyone no of the ramifications, if they pick up that they made a mistake years down the track - will I be hit with penalties and interest?

PS we now have private health cover as of 1 July 06 - so won't have to pay it next year

 

[DaleGG]

Hi

The tax office will likely pick this up in due course when they cross check everything.

In many ways, you should volunteer the information as it always looks better than being caught out....and, it may work in your favour one day if something else is not good.

Dale

Hi everyone,

My partner and I have just lodged our 06 tax returns (lodged before 31 March but just received the Assessment Notice from the ATO).

And it seems that they have not charged either of us the Medicare Surcharge. We earn well inexcess of $100K as a couple and don't have private health cover.

The accountant appears to have completed the tax returns correctly but for some reason the ATO hasn't picked it up.

What I want to know is. . . should I just so tough luck to the ATO as it was their mistake and do nothing. . . or should I relodge an amended return and pay the surcharge.

What would others do?

And does anyone no of the ramifications, if they pick up that they made a mistake years down the track - will I be hit with penalties and interest?

PS we now have private health cover as of 1 July 06 - so won't have to pay it next year

 

[Brenda Irwin]

I would put the money aside and at least earn some interest on it until such time as the ato discovered its own mistake.

 

[sailor]

I would fall on my sword and fess up to the ATO. It pays to keep on their good side. I wouldn't want to give them any reason to think I was dishonest...they just might want to audit me every year for a few years, and I don't want the inconvenience and additional work ferretting out all my receipts.

 

[Joe D]

I'm with Brenda on this.

If you put the money away you have it covered. If 5 (or 7?) years go by and it hasn't been picked up you can forget about it.

Don't worry, the ATO will get their money from you on something else anyway!

 

[Brenda Irwin]

Since I had to ring my accountant on another matter (if losses on share sales can be offset against house sale profits, and it can), I thought I'd question her on the medicare surcharge.

Apparently if both partners net income is added together and it doesn't go over the threshold, the extra levy may not be charged. Therefore, it may not be an ato oversight.

 

[Ausprop]

what a load of redtape rubbish medicare is - a thought i had yesterday as i had to pay the doctor, then waste fuel driving over to the medicare office and lining up with the rest of the town only to get my money back, which will then be charged back to me at the end of the tax year anyway. With an economy operating at full capacity this is a huge waste of resources. Why can't people accept that there are no free lunches - if you go the doctor it will cost money. Emergences are dealt with at hospitals so i cant see the need for this bureaucratic empire.

 

[Mr. Fabulous]

what a load of redtape rubbish medicare is - a thought i had yesterday as i had to pay the doctor, then waste fuel driving over to the medicare office and lining up with the rest of the town only to get my money back, which will then be charged back to me at the end of the tax year anyway. With an economy operating at full capacity this is a huge waste of resources. Why can't people accept that there are no free lunches - if you go the doctor it will cost money. Emergences are dealt with at hospitals so i cant see the need for this bureaucratic empire.

Then why did you go and claim the money back? 'Because I can' is not a valid answer.

Mark

 

[Ausprop]

huh? just becuase it is a stupid inefficient process doesn't mean i am stupid enough not to claim it.

 

[Mr. Fabulous]

huh? just becuase it is a stupid inefficient process doesn't mean i am stupid enough not to claim it.

Then stop complaining.

Mark

 

[WinstonWolfe]

What was your taxable income, not your gross income?
I have never found info on when the surcharge kicks in, but from running the ATO calculator many times, it appears to kick in around $16,000pa per person. Beneath that, you pay no surcharge at all.

My accountant has advised that ~$50,000 taxable income is the threshold for when you should consider taking out health insurance. Beneath this, the levy is less than the insurance. Though that doesn't take into consideration the savings on health bills insurance gives.

Hi everyone,

My partner and I have just lodged our 06 tax returns (lodged before 31 March but just received the Assessment Notice from the ATO).

And it seems that they have not charged either of us the Medicare Surcharge. We earn well inexcess of $100K as a couple and don't have private health cover.

The accountant appears to have completed the tax returns correctly but for some reason the ATO hasn't picked it up.

What I want to know is. . . should I just so tough luck to the ATO as it was their mistake and do nothing. . . or should I relodge an amended return and pay the surcharge.

What would others do?

And does anyone no of the ramifications, if they pick up that they made a mistake years down the track - will I be hit with penalties and interest?

PS we now have private health cover as of 1 July 06 - so won't have to pay it next year

 

[Ausprop]

Then stop complaining.

Mark

so you think all systems that you have to conform to are good? if we all followed that mantra then we would be walking around with blinkers on.

I will get out of this thread and take it to the coffe lounge - why medicare sucks

 

[Mry]

The rules in brief -

$50,000 for a single person
$100,000 for a couple
$100,000 for a sole parent
Add $1,500 to the couple or sole parent threshold for each child you have in addition to the first one.

The amount is your adjusted taxable income, which is your taxable income with a few adjustments eg adding your reportable fringe benefits on top. In order to claim the $100,000 couple threshold, you must declare each other as partners on your return and declare the taxable income and RFB of the other partner as well.

To get out of the surcharge altogether, get hospital cover.

 

[WinstonWolfe]

Thanks for that Mry.
Seems ATO revised the medicare webpage content heavily this year.

They used to have 2 calculators one for levy, another for surcharge.

Have never seen the table before.
http://www.ato.gov.au/individuals/c...002/030/004/002&mnu=1161&mfp=001/002&st=&cy=1

I note they are still charging the levy on one's whole income. THere is no concession for the first $6000 as with standard income tax tables.

 

[letiha]

I think there si some confusion here regarding the medicare levy, and the medicare surgarge ( which Mry correctly gives the limits)

 

[WinstonWolfe]

Letiha, I did muff my terms in the words below.
As Mry states, the levy is 1.5% of taxable income (apparently including the first $6000)
And the surcharge is an additional 1% of taxable income, applied when one doesn't have private health insurance.
Sorry for the confusion.

I have never found info on when the surcharge kicks in, but from running the ATO calculator many times, it appears to kick in around $16,000pa per person. Beneath that, you pay no surcharge at all.

My accountant has advised that ~$50,000 taxable income is the threshold for when you should consider taking out health insurance. Beneath this, the levy surcharge is less than the insurance. Though that doesn't take into consideration the savings on health bills insurance gives.

 

[Mry]

Yes, you can end up paying 2.5% of your income in medicare levy, both the normal levied amount and the surcharge.

I tell clients it is a basic cost vs benefit decision. If you are looking at paying $800 in medicare levy surcharge and the insurance policy cost is $1200, then you had better decide which is a safer bet from a medical and financial perspective.

I don't see the government indexing these thresholds for inflation because (a) as people earn more money and don't pay for private health insurance, the surcharge brings in more revenue and (b) they would prefer you to go private anyway as it frees up the public system. Perhaps Peter McDonald and his bracket creep arguments should include these thresholds as well.

 

[vandalic]

iSelect.com.au has a humorous option for choosing private health care from the menu selection.

I'm interested in - "Cheapest cover to avoid government penalties"

 

[Eee]

The whole medicare surcharge really irkes me because we do not use hospitals for anything, nor doctors. The health services we do use are not covered by Medicare (naturopath, dentist, chiropractor).

 

[Mry]

Somewhat offtopic, but the measures such as the Medicare surcharge to push people into private worry me as a tool to try and forcefeed us a 'for-profit' American style health care system in Australia. After hearing about Sicko, the new Michael Moore movie, things like this surcharge tick me off too.