Within the Australian Tax System, there are certain levy’s which are added on-top of your income tax, and one of these is the Medicare Levy. This levy is there for the purpose of keeping the Australian Public Health System afloat for our beautiful nation and it’s residents.
If you are in Australia on a Temporary Visa, and classified as a Resident for Income Tax Purposes then not only will you be taxed at the same rate as an Australian Resident, but you will also be subject to the same Levy’s and Surcharges that the rest of Australia is subject to.
Depending on what country you are from (including where you resided prior to your arrival into Australia if you lived in a different place from where you were born) and what your taxable income is will depend on whether or not you are liable for the Medicare Levy in Australia.
There are some countries which do not have Reciprocal Health Care Agreements with Australia, and anyone who is from these countries may be exempt from the Medicare Levy on their tax assessment = more money for you. In Australia, Temporary Visa ‘s include the Working Holiday Visa (Subclass 417 and others), 457 Sponsorship Visa, Student Visa’s.
If you are a “Non Resident for Tax Purposes”, then you are not liable for the Medicare Levy and that is that – no need to read any further.
If you are a “Resident for Income Tax Purposes“, then the Medicare Levy may be applied to your tax assessment. The Medicare Levy is applied at a rate dependant on what your Taxable Income is.
a) If your Taxable Income is below $20,896.00 (2015 Tax Year), then you are not liable for the Medicare Levy so you needn’t worry about it being applied.
b) If your Taxable Income is greater than $20,896.00 but less than $26,121.00, the Medicare Levy is calculated at 10% of the difference between your taxable income and $20,896.00
c) If your Taxable Income is greater than $26,121.00, thee Medicare Levy is calculated at 2.0% of your Taxable Income
Some of the countries that have Reciprocal Health Care Agreements with Australia include: United Kingdom & Northern Ireland, Italy, Malta, Sweden, the Netherlands, Finland, Norway, Belgium & Slovenia (sorry guys & girls, you’ll have to pay the Medicare Levy just like Jay and I do). Safe to say that the rest of the countries do not have a Reciprocal Health Care Agreement with Australia and that means that if you fall into either (b) or (c), and you are from a country other than those listed, then you may be entitled to an Exemption from the Medicare Levy.
Unfortunately you don’t automatically qualify if you are from these other countries – you still need to apply and receive a Medicare Entitlement Statement in order to be exempt officially (occasionally the Tax Man asks to see these Medicare Entitlement Statements).
Applying is really straight forward – you need to make photocopies of all the passport photo pages that have a stamp on them (even if the stamp has nothing to do with Australia) – while you’re copying your passport, don’t forget to include your passport photo page of course; then you need to find someone to Certify these copies (a Justice of the Peace or JP can do this for you and it’s free). You’ll then need to get a copy of all of your Australian Visa’s (if it’s an email, then you can print it out, no need to certify it), and then visit the Medicare Entitlement Statement page and print out the form, fill it in, sign it and send everything to the Medicare Entitlement Statement Unit, Medicare Australia. If you want to claim for more than one tax year, then you’ll need to complete a separate application form for each year.
The hard working team at the Medicare Entitlement Statement Unit do their best to try and complete all applications and issue the Exemption Certificates within 28-days but be patient during tax time because they will be very busy with hundreds and thousands of applications swarming their office. Once you’ve received your Medicare Entitlement Statement, you can simply lodge your tax return (don’t forget to provide the Medicare Entitlement Statement to us).
Now if you’ve been in Australia on a Temporary Visa and think “Hey! This will apply to me for last year, is it too late to claim?” don’t panic – you can still submit a Medicare Entitlement Statement application for a past tax year and then simply request for an Amendment.
So how’s that for a tax tip? Costs you nothing to claim, and it’s more money in your pocket. Let us help you get the most tax back!
Accountant & Registered Tax Agent.