The Federal Treasurer issued a Press Release on 1 May 2013
indicating that the Government proposes to increase the Medicare
levy by half a percentage point from 1 July 2014.
From 1 July 2014, the Medicare levy will rise from 1.5% to 2% of
A table summarizing the annual impact is below:
Additional Medicare Levy Payable
DisabilityCare Australia Fund
The Government is proposing to establish a special
DisabilityCare Australia Fund. It is intended that the Revenue from
the additional levy will be paid into the fund, which will only be
drawn down to meet expenditure directly related to
Impact on 457 visa holders
The Australian Government has signed Reciprocal Health Care
Agreements (RHCA) with the United Kingdom, the Republic of Ireland,
New Zealand, Sweden, the Netherlands, Finland, Belgium, Norway,
Slovenia, Malta and Italy and these individuals are subject to the
Therefore 457 visa holders coming from these countries will
potentially become subject to the increased Medicare levy. However,
it is doubtful whether these individuals will be able to access the
DisabilityCare Australia Fund as historically the Federal
Government has restricted access to individuals who are either an
Australian citizen or the holder of a permanent resident visa or
the holder of a special-category visa.
Individuals coming from non reciprocal health care countries are
not subject to the Medicare levy and the proposed increase will not
apply to these individuals. Please note, the individual needs to
apply for the Medicare Levy exemption annually.
Impact on Expatriates
Many employers impose a 'hypothetical tax' when their
Australian employees are sent overseas i.e. an amount that equates
to the tax that would have been paid had the employee remained at
home in Australia.
A key question to be resolved is whether the additional Medicare
levy should be incorporated into the calculation of the Australian
hypothetical tax withholding. Similar levies have been imposed in
the past (i.e. East Timor funding and the Gun buyback scheme).
Because of the high costs, royal commissions should only be convened to address issues of substantial public importance.
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