Medicare levy surcharge calculator

Two incomes decide it, and only one of them is charged

This is the part almost every other calculator gets wrong, and it is worth a paragraph. If you have a spouse, the rate is chosen by your combined income against the family thresholds. That rate is then applied to your own income, not to the combined figure.

So a couple on $110,000 and $150,000 are tested on $260,000 — tier 2 on the FY2023-24 family thresholds — and the one earning $110,000 pays 1.25% of $110,000, not of $260,000. Each spouse is charged on their own income at the shared rate. A calculator that multiplies the combined figure by the rate roughly doubles what a couple actually owes.

You are a family for this if you had a spouse or a dependent child — whatever their income. A single parent of one child is tested against the family threshold, not the single one, and so is somebody whose partner earned nothing.

The family thresholds also rise by $1,500 for each dependent child after the first. The first child does not move them, which catches people out in the other direction.

One exemption runs the other way. If you had a spouse for the whole year and your own income for surcharge purposes was no more than $26,000 — the Medicare levy low-income threshold for singles in FY2023-24 — you pay no surcharge, however much the two of you earned together. A spouse for only part of the year is worked out day by day, which this page does not attempt; it assumes the answer you gave held all year.

Income for surcharge purposes is not taxable income

It is taxable income plus reportable fringe benefits, reportable super contributions — salary sacrificed to super and personal contributions you claimed a deduction for — total net investment losses including a negatively geared rental, and exempt foreign employment income. Taxable income here includes any amount on which family trust distribution tax was paid, and leaves out an assessable First Home Super Saver released amount.

That is the income that is tested, and it is not the income that is charged. The rate is levied on your taxable income, reportable fringe benefits and any amount on which family trust distribution tax was paid — so the calculator asks for those in the first box and the rest, the add-backs, in the second. Salary sacrifice of $20,000 on a taxable income of $100,000 is tested as $120,000 and charged on $100,000.

Two consequences worth knowing before you type a figure in. Salary sacrificing to super lowers your taxable income and does not get you under this threshold. And a negatively geared property does not either: the loss comes off taxable income and is added straight back here. A similar base decides a HELP repayment.

The FY2023-24 tiers

Unlike income tax, this is not marginal: one dollar over a tier boundary re-rates the whole income, so crossing a threshold by a small amount can cost hundreds. It is the one place in the return where earning a little more can leave you worse off.

What counts as cover, and what part of a year does

It has to be hospital cover from a registered Australian health insurer, and it has to cover you, your spouse and all your dependants — a policy in your name alone does not clear a family’s surcharge. An extras or ancillary policy — dental, optical, physio — does not remove the surcharge, which is the most common reason somebody who thought they were covered is charged anyway.

Cover for part of the year removes the surcharge for the days you held it, and you are charged for the rest. The figure above assumes no cover at all; if you held a policy for part of the year, treat it as the ceiling.

The break-even line is the one people actually want: the surcharge is money paid for nothing, so a hospital policy costing less than it leaves you ahead before the policy has paid for a single thing. Above it, the arithmetic stops being obvious and becomes a judgement about what the cover is worth to you.