Medicare Levy Increase to Fund National Disability Insurance Scheme

From 1 July 2014, the Medicare levy will increase from 1.5% to 2% of taxable income for the 2014-2015 income year and later years. The money raised from the increase will be placed into a National Disability Insurance Scheme fund (Disability Care Australia).

This increase will also mean consequential changes for legislation that reference the Medicare levy rate. You may be affected if you are:

• individual taxpayers (the Medicare levy rises from 1.5% to 2%);
• individuals and trustees who are in the pay as you go instalments system;
• trustees with liabilities;
• employers with fringe benefits tax impacts (FBT rate will increase from 46.5% to 47% and gross up rates will increase); and
• superannuation funds (self-managed super funds, funds regulated by the Australian Prudential Regulation Authority and retirement savings account).

INDIVIDUAL INCOME THRESHOLDS

If your taxable income is equal to or less than your lower threshold amount, you do not have to pay the Medicare levy. If you’re taxable income is greater than your lower threshold and less than or equal to your upper threshold amounts, you pay only part of the Medicare levy:

• If you are eligible for the seniors and pensioners tax offset (SAPTO) – lower threshold for 2012-2013 is $32,279 and upper threshold for 2012-2013 is $37,976.
• All other taxpayers – lower threshold for 2012-2013 is $20,542 and upper threshold for 2012-2013 is $24,168.

WHAT IS DISABILITY CARE?

From 1 July 2019, the scheme will support more than 400,000 Australians with a disability, their families and carers. It will help pay for carers, to give parents of children with a disability a break. It will help pay for new wheelchairs tailored to individual needs. It will fund home modifications to help people with a disability move around easier. It will fund early intervention services children, like physiotherapy and speech pathology. The increase to the Medicare levy equates to an extra dollar a day for an average income earner. The change would collect $20 billion in its first five years.

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