Taxation Law



Taxation Law

Answer 1: Medicare levy payable

Medicare and Medicare Levy

In Australia, Medicare is the plan that offers resident to access free or low cost for medical, optometric and hospital care. Beside this, it also permits subsidized or free treatment via doctors like specialists, dental services as well as participating optometrists. Each resident has been permitted to avail this benefit and they are also able to select any private health services. The concept behind Medicare is that each person has right to access good quality of healthcare in spite of their affordability (Medicare levy, 2013).

Medicare Levy is a kind of tax that is contributed by Australian residents. This is calculated at a rate of 1.5% on the taxable income amount over a certain level which has been given below. It has been taken on a pro rate basis and only if a taxpayer is an Australian tax resident for certain time period.

During 2012-2013, Medicare Levy Income Thresholds is as followed:

Financial year (individuals)

2011-12

2012-13

Category

Lower threshold

Upper threshold

Lower threshold

Upper threshold

If you are eligible for the SATO

$30,685

$36,100

N/A

N/A

If you are eligible for the pensioner tax offset

$30,451

$35,824

N/A

N/A

If you are eligible for the SAPTO

N/A

N/A

$32,279

$37,975

All other taxpayers

$19,404

$22,828

$20,542

$24,167

From July 1, 2012, surcharge rate of Medicare levy has increase up to 1% of 'private health and health insurance which has three age range.

Tier

Income

Private health insurance rebate

Medicare levy surcharge

Below 65 years

65 to 69 years

70 years or over

No tier

Singles

30%

35%

40%

nil

$0 - $84,000

Families

$0 - $168,000

1

Singles

20%

25%

30%

1%

$84,001 - $97,000

Families

$168,001 - $194,000

2

Singles

10%

15%

20%

1.25%

$97,001 - $130,000

Families

$194,001 - $260,000

3

Singles

0%

0%

0%

1.50%

$130,001+

Families

$260,001+

Calculate the Medicare levy payable

15,000

Since this amount is for a single Australian resident taxpayer who is not entitled to the seniors and pensioners tax offset and according to the criteria if income is less than $19,404 Medicare levy thresholds would not be deducted while more than this amount i.e. greater than 22,828 are of 1.05% would be deducted. Hence, Medicare levy payable for amount 15,000 for a single Australian resident taxpayer who is not entitled to the seniors and pensioners tax offset would be nil.

23,000

Since 23,000 is lying in the second criteria i.e. if taxable amount is > $22,828; a rate of 1.5% would be deduct from the income. The following is calculation:

Taxable amount: $23,000

Multiple by: 1.5%

Medicare levy amount: $345.00

Hence Medicare levy payable on single Australian resident taxpayer who is not entitled to the seniors and pensioners tax offset is $345.00

40,000

As 40,000 is lying in the second criteria i.e. if taxable amount is > $22,828; a rate of 1.5% would be deduct from the income. The following is calculation:

Taxable amount: $40,000

Multiple by: 1.5%

Medicare levy amount: $600.00

Hence Medicare levy payable on single Australian resident taxpayer who is not entitled to the seniors and pensioners tax offset is $600.00

Answer 2: Residence and source

The term resident in Australia means that a person who has been residing in Australia, holder of a permanent visa and SCV holder who is a protected SCV holder. Considering the case of Ajay who has been in Australia for its studies and leave Australia in Six months due to its father's illness, according to the Australian ...