The Medicare levy is a tax imposed by the Australian government to help fund the country’s public healthcare system, which is known as Medicare. It‘s a percentage-based levy applied to the taxable income of most individuals and families in Australia. However, if you meet certain condition, you could apply an exemption with online tax return system.
Conditions to apply an exemption with online tax return system
You may be able to claim a full or half exemption with online tax return system if you satisfy both of the following conditions:
- One of the following medical conditions applied during all or part of the income year:
- you were a blind pensioner
- received sickness allowance from Centrelink (allowance ceased 20 September 2020)
- you were entitled to full free medical treatment for all conditions under either
- Defence Force arrangements
- Veterans’ Affairs Repatriation Health Card (Gold Card).
- During the period you met a condition above, you also met one of the conditions listed in the table below.
|You had no dependants.
|Each of your dependants (including your spouse) either:
1. was in one of the exemption categories
2. had to pay the Medicare levy.
|You had dependent children who were not in an exemption category but who were also dependants of your spouse, and your spouse either:
1. had to pay the Medicare levy
2. met at least one of the medical conditions and you have completed a family agreement stating that your spouse will pay half of the levy for your joint dependants.
|You had at least one dependant (for example, a spouse) who:
1. was not in an exemption category, and
2. didn’t have to pay the Medicare levy.
|You were single or separated and you:
1. had a dependent child who was not in a Medicare levy exemption category, and
2. were entitled to Family Tax Benefit or the rental assistance component of Family Tax Benefit for that child, and
3. were in a shared care arrangement.
|1. for the days that you had care of your dependent child – Half exemption
2. for the days that you did not have care of your dependent child – Full exemption
|You had a spouse who met at least one of the medical conditions and you had a dependent child who was:
1. not in an exemption category, and
2. dependent on both of you.
|Either you or your spouse can claim a full exemption and the other can claim a half exemption by completing a family agreement.
Family agreement for Medicare levy exemption
A family agreement is a written agreement signed by you and your spouse. It’s an agreement stating who will claim the full exemption and who will claim the half exemption.
You complete a family agreement only if both you and your spouse would have to pay the Medicare levy if you were not in an exemption category.
You don’t need to send this agreement to us unless requested. If you fail to keep the agreement, both of you may become liable for the Medicare levy.
The agreement must contain:
the statement – ‘We agree that the Medicare levy exemption in respect of our dependants for the 2022–23 year will be claimed as follows’
– name of person claiming the full exemption
– name of person claiming the half exemption
– your signature (with date of signature)
– your spouse’s signature (with date of signature).
The agreement must be signed on or before the date the person claiming the full exemption lodges their tax return, unless the Commissioner of Taxation allows further time.
Foreign residents Medicare levy exemption
If you are a foreign resident, and you are using our online tax return services, you could apply an exemption if you meet the following condition:
If you were a foreign resident for tax purposes for:
- the full year, you can claim a full exemption from the Medicare levy
- only part of the year, you can still claim full exemption from the Medicare levy for that period if
– you didn’t have any dependants for that period
– all your dependants were in a Medicare levy exemption category for that period.