Christine is a 45-year-old single woman. For the 2019-20 tax year, Christine's taxable income was$110?000, and she had reportable fringe benefits of$30?000. Christine did not have private patient hospital cover at any time throughout the year. What is Christine's Medicare levy surcharge liability?

Question

Quizplus · Accepted Answer

The Medicare levy surcharge (MLS) is an additional charge applied to Australian taxpayers who do not have private patient hospital cover and earn above a certain income. For the 2019-20 tax year, singles earning over $90,000 (or families earning over $180,000) who do not have private hospital cover may be charged an extra 1% to 1.5% of their income, depending on their income bracket. Christine's total income for MLS purposes is $140,000 ($110,000 taxable income + $30,000 reportable fringe benefits), placing her in the income bracket where the surcharge is 1.25%. Therefore, her MLS liability is 1.25% of $110,000, which equals $1,375. However, since the calculation should be based on her total income for MLS purposes ($140,000), the correct calculation is 1.25% of $140,000, which equals $1,750.

Christine Is a 45-Year-Old Single Woman