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I've just been doing some reading, can someone confirm that there is a 30% tax rebate for those who have private health insurance?
Also are there any tax guru's out there who can give me the run down on the whole medicare levy going up after you turn 31 and don't have PHI?
Thank you from a very confused individual :)
ATO Private Health Tax Offset
It will be means tested. Per this link. So if your family is earning less than $168K you will get the 30% rebate.
I think you are confusing the medicare levy surcharge with the private health insurance levy (not sure of the exact name). The medicare levy surcharge is an extra tax that is charged regardless of your age if you don't have PHI and earn over the threshold (again $168K) - see link here. Note that the Medicare Levy Surcharge is a separate levy to the Medicare Levy. The medicare levy applies regardless of whether you have PHI or not.
The insurance companies charge a levy based on your age. This goes up each year and is really just an increase in the premium to reflect the increase in risk to them based on the assumption that people get sick/injured more often as they get older (just like smoking, being overweight etc for life insurance companies). This has been legislated to a fixed amount if you apply before age 30. I'm not sure of the exact amounts & ages but that's the general idea.
On an aside, if by chance we were earning $168K & didn't have PHI, we would be charged $1680 in MLS. We currently pay over $3K in (rather basic) PHI. I don't really see how MLS is an incentive to take out PHI. We would have to be earning about $250K to make it financially worthwhile if that was our only consideration. I know you can get it cheaper but :dunno: doesn't make sense. Also, if you took out insurance today, the MLS is still charged from 1/7/12 to 17/6/13 on a pro-rata basis. So for my example of someone earning $168K taking out insurance today would still have to pay $1620 in MLS. The ads saying take out PHI before 30 June to avoid paying extra tax are completely misleading bordering on false advertising IMO.
HTH
That was exactly the response I was looking for Rowellen!
So, just to clarify, the medicare levy will apply regardless of whether or not we have PHI.
The medicare surcharge levy does not apply to us as long as we earn under $168k
The PHI tax offset comes straight off the amount of tax you owe / or are getting refunded, it's not treated as a deduction in your taxable income right?
Yep that's right - for all three statements :).
There are a couple ways to claim the offset - one is as a reduction of tax payable as you said. The other is via reduced premiums throughout the year.
Awesome, thanks for your help with that!