Can You Save Tax on Health Insurance?
Government Incentives and Penalties - The Australian government has put in place a number of initiatives designed to get Australians covered by private health insurance. If you know what these initiatives are, you may be able to save on tax, time and money...
The 30% Government Rebate on Private Health Insurance
A 30 per cent rebate on annual health fund premiums, regardless of income and from the 1st April, 2005, the rebate was increased to 35 per cent for those aged between 65 and 69, and to 40 per cent for those aged 70 or older.
- Learn more about the 30% Rebate
The Medicare Levy Surcharge
By taking out eligible levels of Private Health Insurance you may be able to save on tax (MLS). If you don't have the appropriate level of hospital insurance and are either single with a taxable income of $50,000* or more per year, or a couple or family earning a combined taxable income of $100,000* or more, you may be forced to pay an extra 1% in tax (MLS).
This is called the Medicare Levy Surcharge and can equate to a minimum of $500 a year for singles and $1,000 a year for qualifying families. Essentially this is money that is foregone and could have been used to purchase private cover. In addition to avoiding paying the extra tax, the Federal Government rebates 30% of your health insurance costs (levels of rebate depend on the age of the insured persons).
- Learn more about the Medicare Surcharge
* Proposed changes to the Medicare Levy Surcharge
In the Federal Government's May 2008 Budget it was proposed that the taxable income threshold for the Medicare Levy Surcharge would increase to $100,000 for singles and $150,000 for couples and families.
Until passed by the Federal Parliament, this proposal remains only a proposal. Parliament is unlikely to consider the legislation again until early September 2008. Importantly, the proposal may change from what is outlined above, and it is not certain whether the effective date would be applied retrospectively or at a future date.
Therefore, for the time being, $50,000 remains the threshold for singles and $100,000 the threshold for couples and families.
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