The MLS is an additional tax and applies to Australian residents for taxation purposes who are high income earners and don’t have an appropriate level of hospital cover. If you or your family do not have an appropriate level of private patient hospital cover you may be required to pay the MLS.
For 2019-20 the base income threshold is $90,000 for singles and $180,000 for families. However, you do not have to pay the MLS if your family income exceeds the threshold but your own income for MLS purposes was $22,398 or less. General cover, commonly known as ‘extras’, is not private patient hospital cover. It covers items such as optical, dental, physiotherapy or chiropractic treatment.
The Medicare Levy Surcharge (MLS) is in addition to the Medicare levy. Depending on your income for MLS purposes, the MLS rate is 1%, 1.25% or 1.5% of:
- your taxable income
- your total reportable fringe benefits, and
- any amount on which family trust distribution tax has been paid.
To be exempt from the MLS, consider having an appropriate level of private patient hospital cover for you, your spouse, or any of your dependants if:
- your annual income is more than $90,000; or
- your annual income with your spouse annual income is more than $180,000.
Medicare levy surcharge income testing
The medicare levy surcharge is income tested against the following income tier thresholds for 2019-20:
| Threshold | Tier 1 | Tier 2 | Tier 3 | |
| Singles | $90,000 or less | $90,001 – $105,000 | $105,001 – $140,000 | $140,001 or more |
| Families | $180,000 or less | $180,001 – $210,000 | $210,001 – $280,000 | $280,001 or more |
| Medicare levy surcharge rate | 0% | 1% | 1.25% | 1.5% |
For families, the income threshold increase by $1,500 for each MLS dependent child after the first child.
This is a general advice, for more information or to discuss your individual case please contact us.