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The Medicare Levy Surcharge, or MLS, is an additional 1% to 1.5% tax designed to encourage Australians who don’t hold private hospital cover and earn more than $90k (and couples/families earning more than $180k) to take out health insurance. The MLS is designed to reduce the pressure on the public healthcare system.

If you earn above the specified threshold, you may have to pay the MLS. Here’s what you need to know about the MLS at tax time.

What to know when filling out your tax return

The MLS is included with the Medicare levy and shown as one amount at the time of assessment. This is the amount listed on your notice of assessment each year called ‘Medicare levy and surcharge’ that you can claim back if you’re under the income threshold.

Your MLS will depend on your household income and the number of dependents you have. Read more about these MLS income tiers.

Your income (for MLS purposes) is comprised of the following elements:

  • Your taxable income;
  • Any fringe benefits;
  • Investment losses;
  • Foreign employment income;
  • Shared income of a trust with your spouse; and superannuation contributions.

As of April 2017, the ATO states that you don’t need to pay the MLS ‘if your family income exceeds the threshold, but your own income for MLS purposes was $21,335 or less’.

Also, be aware that:

  • Extras cover alone will not be enough to avoid the MLS;
  • Your health insurance policy must have an excess of $750 or less; and
  • Couples/families need an excess of $1,500 or less.

The least MLS amount you might have to pay is $900, so why not get covered? Our health insurance comparison service will help you find the perfect policy for your situation.

And if you’re filling out your tax return and need a step by step guide for the MLS section, head on over to the ATO website.

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