Private Health Changes
It’s looking like the government is going to get its changes to the private health rebate and medicare levy surcharge enacted into legislation. If it becomes law then the changes will come into effect for the 2013 tax year onwards (so for your 2012 tax return you are safe).
So what’s going to change?
If you have private health – your private health rebate (i.e the amount the govt pays the health fund) will be income tested. Currently most people get the 30% private health rebate, which means that you pay 70% of the premiums and govt pays 30% for you. However from 1 July 2012 if you are single with no dependants and earn over $84k then your rebate will be reduced to 20%, earn over $97k and it gets reduced to 10%, and any single person earning over $130k gets no rebate. (Double those income figures for families or for singles with dependant children).
Earn $84k or under? Congrats you will still get the 30% rebate! however don’t celebrate too quickly as the cost of private health will increase as a result of people dropping their private health cover, economies of scale and all that business type speak. So brief summary – private health premiums are on the up and up.
Don’t have private health – so you are ditching your private health cover and going to rely on the good old public health system? The govt has already thought about you guys and figured on that scenario playing out. So to discourage such blatant attempts to save yourself some money the govt is increasing the medicare levy surcharge rates from what is now 1%, to 1.25 % for any single worker earning over $97k and to 1.5% for any single worker earning over $130k. Doesn’t sound like much but 1.25% on $98k is still $1,225.00 and that’s on top of the medicare levy (medicare levy and medicare levy surcharge are two distinct things). * The cutoff figures may be tweaked in the Senate.
OK so I will just reduce my income right? I can get around it right? – If you’re thinking of buying some more negatively geared shares or another negatively geared rental property – think again. The govt do have some smart cookies working for them and they had these options covered a couple of years ago. You see the income that is used to calculate your medicare levy surcharge is not based on the income that is used to work out your tax bill but is based upon ‘surcharge income’ (catchy hey). Anyway ‘surcharge income’ is your ‘taxable income’ plus you have to add back certain deductions that you claimed such as your rental property loss and your loss on financial investments.
So there it is, everyone is going to be paying more. But at least those extra taxes go towards funding schools, hospitals, police/ambulance/fire stations etc….. right?
PS – I personally will be keeping my private health insurance as just like any insurance – when you need it you wish you had it.
