ATO Interpretative Decision

ATO ID 2001/239 (Withdrawn)

Income Tax

• This ATO ID is withdrawn. Guidance relating to the issue addressed in this ATO ID can be found in ato.gov.au content M1 Medicare levy reduction or exemption 2017 (QC 51123) and M2 Medicare levy surcharge (MLS) 2017 (QC 51126).
  This document has changed over time. View its history.

Issue

Is a person who receives a disability support pension and is not blind liable for the medicare levy surcharge under section 8B of the Medicare Levy Act 1986 (MLA 1986)?

Decision

Yes, a person who receives a disability support pension and is not blind is liable for the medicare levy surcharge under section 8B of the MLA 1986.

Facts

The taxpayer is in receipt of a disability support pension.

The taxpayer is single with no dependents.

The taxpayer does not have private patient hospital insurance cover.

The taxpayer receives a one-off superannuation payment which increases their income for surcharge purposes to an amount which exceeds the relevant singles threshold.

The taxpayer is not blind.

Reasons for Decision

Section 8B of the MLA 1986 imposes an increased amount of medicare levy (the surcharge) on those taxpayers who:

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are not married

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have no dependants

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do not have private hospital insurance

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whose income for surcharge purposes to an amount which exceeds the relevant singles threshold, and

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are not a prescribed person.

The taxpayer meets each of the first four requirements and will be liable for the surcharge unless they are a prescribed person.

Whether a person is a prescribed person for the purposes of the medicare levy surcharge, is determined by section 251U of the Income Tax Assessment Act 1936 (ITAA 1936).

Subparagraph 251U(1)(ca)(ii) and paragraph 251U(1)(caa) of the ITAA 1936 provides that:

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where a person was in receipt of a disability support pension paid under Part 2.3 of the Social Security Act 1991 (SSA 1991), and

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the rate of pension was calculated under either section 1065 or section 1066B of the SSA 1991

the person shall be a prescribed person.

Section 1065 of the SSA 1991 calculates the rate of the Disability Support Pension for permanently blind persons.

Section 1066B of the SSA 1991 calculates the rate of the Disability Support Pension for permanently blind people who are under the age of 21.

The effect of these provisions is that to qualify as a prescribed person for the purposes of the surcharge, the recipient of the Disability Support Pension must be permanently blind.

As the taxpayer is not permanently blind they are not a prescribed person, and therefore are liable under section 8B of the MLA 1986 for the medicare levy surcharge.

Amendment History

Legislative References:
Income Tax Assessment Act 1936
   section 251U
   subparagraph 251U(1)(ca)(ii)
   paragraph 251U(1)(caa)

Keywords
Medicare levy surcharge
Medicare levy
Social security pensions & allowances
Social security payments

Business Line:  Small Business/Individual Taxpayers

Date of publication:  21 August 2001

ISSN: 1445-2782