ATO Interpretative Decision
ATO ID 2002/48 (Withdrawn)
Medicare levy surcharge - eligibility for family surcharge threshold where taxpayer pays child support for children who are not residing with the taxpayer
FOI status: may be released
Status of this decision: Decision withdrawn 1 September 2017.
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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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 a taxpayer, who pays child support for children who are not residing with the taxpayer and does not have an insurance policy providing private patient hospital cover, entitled to the family surcharge threshold under section 8C of the Medicare Levy Act 1986 (MLA 1986) in calculating any increase in the Medicare levy payable?
Yes, the taxpayer is entitled to the family surcharge threshold under section 8C of the MLA 1986 when calculating any increase in the Medicare levy payable as the taxpayer has 'dependants' as defined in subsection 251R(3) of the Income Tax Assessment Act 1936 (ITAA 1936).
The taxpayer is not married and is not a 'prescribed person'.
The taxpayer pays child support in respect of children under 16 years of age, or 21 years of age for the 2005-06 and later years of income.
The children do not reside with the taxpayer.
The taxpayer is not covered by an insurance policy that provides private patient hospital cover.
Reasons for Decision
An unmarried person that has one or more dependants is liable to pay an increase in the Medicare levy of 1 per cent on their taxable income and reportable fringe benefits under section 8C of the MLA 1986 if they are not a 'prescribed person' as defined in section 251U of the ITAA 1936, they do not have an insurance policy providing 'private patient hospital cover' and their taxable income exceeds the amount calculated in accordance with the formula for the 'family surcharge threshold' contained in section 3A of the MLA 1986.
Subsection 251R(3) of the ITAA 1936 provides that a taxpayer will be taken to have a dependant if, during any part of the year of income:
- the person was a resident of Australia;
- the person was either a:
- spouse of the taxpayer;
- a child of the taxpayer less than 16 years of age, or 21 years of age for the 2005-06 and later years of income; or
- a child of the taxpayer not less than 16 years of age, or 21 years of age for the 2005-06 and later years of income, but less than 25 years of age and receiving full-time education at a school, college or university; and
- the taxpayer contributed to the maintenance of the person
The taxpayer is not married, is not covered by private patient hospital cover and is not a prescribed person. The taxpayer contributed to the maintenance of the children by making child support payments and consequently has 'dependants' as defined in subsection 251R(3) of the ITAA 1936. The taxpayer is therefore entitled to use the 'family surcharge threshold' in calculating any increase in the Medicare levy payable under section 8C of the MLA 1986.
Date of decision: 28 June 2001
Medicare Levy Act 1986
Income Tax Assessment Act 1936
Medicare levy surcharge
Siebel/TDMS reference number: DW231051
Business line: Small Business/Individual Taxpayers
Date of publication: 24 January 2002
|ATO ID 2002/48W history