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ATO Interpretative Decision

ATO ID 2001/339 (Withdrawn)

Income Tax
Medicare levy surcharge - one spouse has hospital cover, the other does not

Attention This ATO ID is a straightforward application of the law and does not contain an interpretative decision.
Attention This document has changed over time. View its history.
FOI status: may be released
Status of this decision: Decision Withdrawn 1 April 2010

CautionCAUTION: This is an edited and summarised record of a Tax Office decision. This record is not published as a form of advice. It is being made available for your inspection to meet FOI requirements, because it may be used by an officer in making another decision.

This ATOID provides you with the following level of protection:

If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.


Is the Medicare levy surcharge (surcharge) payable under section 8D of the Medicare Levy Act 1986 (MLA 1986) by one spouse who has private patient hospital cover where the other spouse does not?


Yes, the surcharge is payable under section 8D of the MLA 1986 provided the combined taxable incomes of both spouses exceeds $100 000.


A married couple have a combined taxable income of $110 000 being made up of $80 000 for spouse A and $30 000 for spouse B.

Spouse A has private patient hospital cover for the full income year. Spouse B has no cover during the income year.

Both spouses are not prescribed persons for the purposes of the Medicare levy.

Reasons for Decision

A liability for the surcharge arises where a person, or any of their dependants, does not have the required private patient hospital cover and the person's taxable income exceeds the threshold amount.

Where the person is regarded as a member of a family, the 'family surcharge threshold' amount applies. This amount is calculated as a minimum amount of $100 000 that is increased by $1500 for each dependent child after the first child.

In accordance with section 8D of the MLA 1986, a surcharge of 1 per cent of the person's taxable income is payable in addition to the amount of Medicare levy otherwise payable where a person satisfies all of the following tests for the whole or part of the * the person is married;

  the person or at least one of the person's dependants (and that dependant was not a prescribed person), is not covered by an insurance policy that provides private patient hospital cover;
  the person is not, or is taken not to be, a prescribed person;
  the combined taxable incomes of the person and the person's spouse exceeds the family surcharge threshold; and
  the person's taxable income exceeds $13 807.

For surcharge purposes, a married couple who are living together are treated as a 'family'. Each spouse is considered to be a dependant of the other, even if they are each in receipt of income from different sources.

A family is not treated as two singles, even where there are no children present. Both spouses are treated as members of the same family. For this reason, the family surcharge thresholds apply rather than the single surcharge thresholds.

In this case, one of spouse A's dependants does not have the required private patient hospital cover and the combined income of both spouses exceeds the family surcharge threshold. The fact that spouse A was fully covered does not affect this outcome.

Spouse B is also liable to the surcharge because spouse B's taxable income is above the minimum threshold of $13 807 and the combined taxable income of both spouses is above $100 000.

If both spouses have private patient hospital cover (whether as two separate single covers, a couple cover or a family cover) and in the case of policies taken out after 24 May 2000, the annual excess limits are satisfied, both would be exempted from the surcharge.

Both spouses satisfy the tests under section 8D of the MLA 1986 and both are therefore liable for the surcharge.

Date of decision: 21 August 2001

Year of income:

Legislative references:
Medicare Levy Act 1986
   section 8D

Dependent spouse
Medicare levy surcharge

Business line: Small Business/Individual Taxpayers

Date of publication: 15 September 2001

ISSN: 1445-2782

ATO ID 2001/339 (Withdrawn) history   Top  
   Date   Version 
   21 August 2001   Original statement   
 You are here ®   1 April 2010   Withdrawn   


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