Ursula Stephens (NSW, Australian Labor Party, Shadow Parliamentary Secretary for Science and Water) Share this | Hansard source

The Tax Laws Amendment (Medicare Levy and Medicare Levy Surcharge) Bill 2006 amends the Medicare Levy Act 1986 to increase the Medicare levy low-income thresholds for individuals and their families. The dependent child-student component of the family threshold will also be increased. The increases are in line with movements in the consumer price index. This bill also increases the Medicare levy low-income threshold for pensioners below age pension age so that they do not have a Medicare levy liability where they do not have an income tax liability. The A New Tax System (Medicare Levy Surcharge—Fringe Benefits) Act 1999 will also increase the Medicare levy surcharge low-income threshold in line with movements in the CPI. The individual threshold will be increased from $15,902 to $16,284, while the level of the family income threshold will also rise from $26,834 to $27,478. That threshold will also be increased by a further $2,523 for each dependent child or student. This bill also proposes to increase the threshold amount for pensioners below age pension age, so that pensioners who face no income tax liability will not have a Medicare levy liability. The threshold amount for pensioners who are under age pension age will also go up from $19,252 to $19,583.

The Medicare levy also applies at a reduced rate to taxpayers with taxable incomes above the threshold amount but not more than the phase-in limit. For 2005-06 the rate of the Medicare levy payable in these circumstances is limited to 20 per cent of the excess over the threshold amount that is relevant to the particular person. The phase-in limit for individuals is increased from $17,191 to $17,604. Pensioners who are under age pension age will have an increase in the phase-in limit from $20,812 to $21,170. There is no phase-in limit for families as the figure changes with the number of dependants. Instead, there is a formula that limits the levy payable by persons with families to 20 per cent for 2005-06 of the amount of family income that exceeds their family income threshold, and this range is increased for dependants.

A Medicare levy surcharge of one per cent applies on taxable income in certain cases where taxpayers do not have private patient hospital cover. The surcharge of one per cent also applies to the reportable fringe benefits in certain cases where taxpayers do not have private patient hospital cover. However, a family member who would otherwise be liable for the surcharge is not required to pay the surcharge where the total of that person’s taxable income and reportable fringe benefits do not exceed the individual low-income thresholds. Unlike the Medicare levy, there is no shading-in of the surcharge above the threshold amount. References to the individual low-income threshold amounts of $15,902 in the Medicare levy surcharge provisions in respect of surcharge on a taxable income are also being increased to $16,284. References to the individual low-income threshold amount of $15,902 in the Medicare levy surcharge provisions of the bill in respect of surcharge on reportable fringe benefits are also being increased to $16,284. On that basis, Labor is supporting the bill.