{"id":"C2004A03351","name":"Medicare Levy Act 1986","slug":"medicare-levy-act-1986","collection":"act","jurisdiction":"commonwealth","status":"in_force","isInForce":true,"actNumber":"110 of 1986","makingDate":null,"administeringDepartment":null,"currentVersion":{"id":7367,"registerId":"commonwealth-C2004A03351-current","compilationNumber":null,"startDate":"2026-03-30","status":"InForce","reasons":null,"registeredAt":null},"sections":[{"sectionNumber":"1","sectionType":"section","heading":"Short title","content":"#### 1 Short title\n\n  This Act may be cited as the Medicare Levy Act 1986.","sortOrder":0},{"sectionNumber":"2","sectionType":"section","heading":"Commencement","content":"#### 2 Commencement\n\n  This Act shall come into operation on the day on which it receives the Royal Assent.","sortOrder":1},{"sectionNumber":"3","sectionType":"section","heading":"Interpretation","content":"#### 3 Interpretation\n\n  (1) In this Act, unless the contrary intention appears:\n\n> AMIT (short for attribution managed investment trust) has the same meaning as in the Income Tax Assessment Act 1997.\n\n> Assessment Act means the Income Tax Assessment Act 1936.\n\n> family tier 1 threshold, of a person for a year of income, means the family tier 1 threshold (within the meaning of the Private Health Insurance Act 2007) of the person for the financial year corresponding to the year of income.\n\n> income for surcharge purposes has the same meaning as in the Income Tax Assessment Act 1997.\n\n> levy means Medicare levy referred to in section 5.\n\n> phase‑in limit means:\n\n    (a) for a person who is entitled to a rebate under section 160AAAA of the Assessment Act—$53,775; or\n    (c) in any other case—$34,027.\n\n> singles tier 1 threshold, of a person for a year of income, means the singles tier 1 threshold (within the meaning of the Private Health Insurance Act 2007) of the person for the financial year corresponding to the year of income.\n\n> threshold amount means:\n\n    (a) for a person who is entitled to a rebate under section 160AAAA of the Assessment Act—$43,020; or\n    (c) in any other case—$27,222.\n\n> tier 2 earner has the meaning given by section 3A.\n\n> tier 3 earner has the meaning given by section 3A.\n\n  (2) In this Act, a reference to income for surcharge purposes, net income or taxable income is to be read as a reference to that term for the year of income.\n  (2A) In section 8B, 8C, 8D, 8E, 8F or 8G, net income and taxable income have the meanings that they would have in that section if subsection 271‑105(1) in Schedule 2F to the Assessment Act were ignored.\n  (3) Subject to subsection (3A), for the purposes of this Act:\n    (a) a person shall be deemed not to be married to another person if they are living separately and apart; and\n    (b) where the last person to whom another person was married during a year of income died during the year of income, those persons shall be deemed to have been married on the last day of the year of income.\n  (3A) For the purposes of sections 8B, 8C and 8D, if:\n    (a) the last person to whom another person was married during a year of income died during the year of income; and\n    (b) the death occurred while they were married;\n  the living person is taken to be married to the person who died during the period starting on the day he or she died and ending on 30 June of the year of income.\n  (4) Subject to the preceding provisions of this section, expressions used in this Act that are also used in Part VIIB of the Assessment Act have in this Act, unless the contrary intention appears, the same meanings as those expressions have in that Part of the Assessment Act.\n  (5) For the purposes of this Act, a person is covered by an insurance policy that provides private patient hospital cover if:\n    (a) the policy is a complying health insurance policy (within the meaning of the Private Health Insurance Act 2007) that covers hospital treatment (within the meaning of that Act); and\n    (b) any excess payable in respect of benefits under the policy is no more than the applicable amount set out in section 45‑1 of that Act in any 12 month period.","sortOrder":2},{"sectionNumber":"3A","sectionType":"section","heading":"Meaning of tier 2 earner and tier 3 earner","content":"#### 3A Meaning of tier 2 earner and tier 3 earner\n\n  (1) Subject to this section, for the purposes of this Act:\n    (a) tier 2 earner, for a year of income, means a tier 2 earner (within the meaning of the Private Health Insurance Act 2007) for the financial year corresponding to the year of income; and\n    (b) tier 3 earner, for a year of income, means a tier 3 earner (within the meaning of that Act) for the financial year corresponding to the year of income.\n  (2) In determining whether a person is a tier 2 earner or tier 3 earner for a year of income for the purposes of this Act, section 22‑30 of the Private Health Insurance Act 2007 operates with the modification set out in subsection (3).\n  (3) Replace paragraph 22‑30(1)(b) of the Private Health Insurance Act 2007 with the following paragraph:\n    (b) on any day in the year, the person has one or more dependants (within the meaning of the A New Tax System (Medicare Levy Surcharge—Fringe Benefits) Act 1999), other than a dependant to whom the person is married (within the meaning of that Act):","sortOrder":3},{"sectionNumber":"4","sectionType":"section","heading":"Incorporation","content":"#### 4 Incorporation\n\n  The Assessment Act is incorporated, and shall be read as one, with this Act.","sortOrder":4},{"sectionNumber":"5","sectionType":"section","heading":"Imposition of Medicare levy","content":"#### 5 Imposition of Medicare levy\n\n  Medicare levy, to the extent that that levy is payable in accordance with Part VIIB of the Assessment Act, is imposed in accordance with this Act at the rate applicable in accordance with this Act.\n\n> Note: Subdivision 61‑L (tax offset for Medicare levy surcharge (lump sum payments in arrears)) of the Income Tax Assessment Act 1997 might provide a tax offset for a person if Medicare levy surcharge (within the meaning of that Act) is payable by the person.","sortOrder":5},{"sectionNumber":"6","sectionType":"section","heading":"Rate of levy","content":"#### 6 Rate of levy\n\n  (1) The rate of levy payable by a person upon a taxable income is 2%.\n  (2) The rate of levy payable by a person in the capacity of a trustee of a trust estate upon a share of the net income of the trust estate to which a beneficiary is presently entitled, being income in respect of which the trustee is liable to be assessed pursuant to section 98 of the Assessment Act, is 2%.\n  (3) The rate of levy payable by a person in the capacity of a trustee of a trust estate upon the net income of the trust estate or a part of that net income, being income in respect of which the trustee is liable to be assessed and pay tax pursuant to section 99 or 99A of the Assessment Act, is 2%.\n  (4) The rate of levy payable by a person in the capacity of a trustee of an AMIT in respect of an amount mentioned in subsection 276‑405(2) of the Income Tax Assessment Act 1997, being an amount in respect of which the trustee is liable to be assessed pursuant to that subsection, is 2%.\n  (5) The rate of levy payable by a person in the capacity of a trustee of an AMIT in respect of an amount mentioned in subsection 276‑415(2) of the Income Tax Assessment Act 1997, being an amount in respect of which the trustee is liable to be assessed pursuant to that subsection, is 2%.\n  (6) The rate of levy payable by a person in the capacity of a trustee of an AMIT in respect of an amount mentioned in subsection 276‑420(2) of the Income Tax Assessment Act 1997, being an amount in respect of which the trustee is liable to be assessed pursuant to that subsection, is 2%.","sortOrder":6},{"sectionNumber":"7","sectionType":"section","heading":"Levy in cases of small incomes","content":"#### 7 Levy in cases of small incomes\n\n  (1) Where the taxable income of a person does not exceed the threshold amount, no levy is payable by the person upon that taxable income.\n  (2) Where the taxable income of a person exceeds the threshold amount but does not exceed the phase‑in limit, the amount of levy payable by the person upon that taxable income but for sections 8 and 9 shall not exceed 10% of the amount of the excess.\n  (3) Where the net income of a trust estate or a part of that net income, being income in respect of which a person in the capacity of a trustee of a trust estate is liable to be assessed pursuant to section 99 of the Assessment Act, does not exceed $416, no levy is payable by the person upon that net income or part, as the case may be.\n  (4) Where the net income of a trust estate or a part of that net income, being income in respect of which a person in the capacity of a trustee of a trust estate is liable to be assessed and pay tax pursuant to section 99 of the Assessment Act, exceeds $416 but does not exceed $520, the amount of levy payable by the person upon that net income shall not exceed 10% of the amount of the excess.","sortOrder":7},{"sectionNumber":"8","sectionType":"section","heading":"Amount of levy—person who has spouse or dependants","content":"#### 8 Amount of levy—person who has spouse or dependants\n\n  (1) Where a person:\n    (a) is a married person on the last day of the year of income; or\n    (b) is entitled to a tax offset under Subdivision 61‑A of the Income Tax Assessment Act 1997 for the year of income in respect of the person’s child (within the meaning of that Act); or\n    (c) is entitled to a notional tax offset under Subdivision 961‑B of the Income Tax Assessment Act 1997 for the year of income;\n  and the family income in relation to the person does not exceed the family income threshold in relation to the person, no levy is payable by the person upon the taxable income of the person.\n  (2) Subject to subsection (3), where a person (in this subsection referred to as the relevant person):\n    (a) was a married person on the last day of the year of income; or\n    (b) is entitled to a tax offset under Subdivision 61‑A of the Income Tax Assessment Act 1997 for the year of income in respect of the person’s child (within the meaning of that Act); or\n    (c) is entitled to a notional tax offset under Subdivision 961‑B of the Income Tax Assessment Act 1997 for the year of income;\n  and the family income in relation to the relevant person exceeds the family income threshold in relation to the relevant person, the amount of the levy payable by the relevant person upon the taxable income of the relevant person but for this section and section 9 shall be reduced by the amount (if any) calculated in accordance with the formula:\n  ![Start formula 2% of the family income threshold in relation to the relevant person minus open bracket 0.08 times open bracket The family income in relation to the relevant person minus The family income threshold in relation to the relevant person close bracket close bracket end formula](image.002.png)\n  (3) Where:\n    (a) but for this subsection, the amount of levy payable by a person upon the taxable income of the person but for this section and section 9 would be reduced by an amount (in this subsection referred to as the reduction amount) ascertained in accordance with subsection (2);\n    (b) the person was a married person on the last day of the year of income; and\n    (c) but for this section and section 9, the spouse of the person would be liable to pay levy upon the taxable income of the spouse;\n  the reduction amount shall, subject to subsection (4), be reduced by so much of the reduction amount as bears to the reduction amount the same proportion as the amount of the taxable income of the spouse bears to the family income in relation to the person.\n  (4) Where:\n    (a) subsection (3) applies for the purposes of ascertaining the levy payable by a person upon the taxable income of the person but for section 9; and\n    (b) the amount of the reduction of that levy ascertained in accordance with subsections (2) and (3) exceeds the amount of the levy payable by the person upon the taxable income of the person but for this section and section 9;\n  the amount of levy payable by the spouse of the person upon the taxable income of the spouse but for this subsection and section 9 shall be reduced by the amount of the excess.\n  (5) In this section:\n\n> family income, in relation to a person, means:\n\n    (a) if the person was a married person on the last day of the year of income—the sum of the taxable income of the person and the taxable income of the spouse of the person; and\n    (b) in any other case—the taxable income of the person.\n\n> family income threshold, in relation to a person (the relevant person), means $45,907 increased by $4,216 for each person covered by paragraph 961‑5(1)(c) of the Income Tax Assessment Act 1997 in respect of whom:\n\n    (a) in a case to which paragraph (b) does not apply—the relevant person; or\n    (b) if the relevant person was a married person on the last day of the year of income—the relevant person or the spouse of the relevant person;\n  is entitled to a notional tax offset under Subdivision 961‑A of the Income Tax Assessment Act 1997 for the year of income.\n  (6) In the application of the definition of family income threshold in subsection (5) in determining the family income threshold in relation to a person in relation to a year of income, being a person who was not a married person on the last day of the year of income, the amount of $45,907 referred to in that definition shall not be increased on account of another person unless family tax benefit under the A New Tax System (Family Assistance) (Administration) Act 1999 was payable to the first‑mentioned person in respect of that other person in respect of the whole or any part of the year of income.\n  (7) Subsections (5) and (6) apply in relation to a person who is entitled for the year of income to a rebate under section 160AAAA of the Assessment Act as if each reference to $45,907 were a reference to $59,886.","sortOrder":8},{"sectionNumber":"8B","sectionType":"section","heading":"Levy surcharge—person without dependants who is not married during whole or part of a financial year","content":"#### 8B Levy surcharge—person without dependants who is not married during whole or part of a financial year\n\n  (1) This section applies to a person during a period if during the whole of the period:\n    (a) the person is not a married person; and\n    (b) the person does not have any dependants; and\n    (c) the person is not covered by an insurance policy that provides private patient hospital cover; and\n    (d) the person is not a prescribed person.\n\n> Note 1: Subsection 251R(2) of the Assessment Act treats certain persons who are not married as if they were married.\n\n> Note 2: For dependant see sections 251R and 251V of the Assessment Act.\n\n> Note 3: For prescribed person see section 251U of the Assessment Act.\n\n  (2) If the person’s income for surcharge purposes exceeds the person’s singles tier 1 threshold for the year of income, the amount of the levy that, apart from this section, would have been payable by the person under this Act for the year of income is to be increased:\n    (a) if this section applies to the person for the whole of the year of income—by 1% of the person’s taxable income; or\n    (b) if this section applies to the person for only some of the days in the year of income—by the amount worked out using the formula:\n    ![Start formula open bracket 1% of the person's taxable income close bracket times start fraction Number of those days over Number of days in the year of income end fraction end formula](image.003.png)\n  (3) Increase the amount of each percentage mentioned in subsection (2) by 0.25 of a percentage point if the person is a tier 2 earner for the year of income.\n  (4) Increase the amount of each percentage mentioned in subsection (2) by 0.5 of a percentage point if the person is a tier 3 earner for the year of income.","sortOrder":9},{"sectionNumber":"8C","sectionType":"section","heading":"Levy surcharge—person with dependants who is not married during whole or part of a financial year","content":"#### 8C Levy surcharge—person with dependants who is not married during whole or part of a financial year\n\n  (1) This section applies to a person during a period if during the whole of the period:\n    (a) the person is not a married person; and\n    (b) the person has one or more dependants; and\n    (c) the person or at least one of the person’s dependants (other than a dependant who is, or would, apart from subsection 251U(2) of the Assessment Act, be taken to be, a prescribed person) is not covered by an insurance policy that provides private patient hospital cover; and\n    (d) the person is not, or is taken under section 251VA of the Assessment Act not to be, a prescribed person.\n\n> Note 1: Subsection 251R(2) of the Assessment Act treats certain persons who are not married as if they were married.\n\n> Note 2: For dependant see sections 251R and 251V of the Assessment Act.\n\n> Note 3: For prescribed person see section 251U of the Assessment Act.\n\n  (2) For the purposes of paragraph (1)(c), a person to whom section 251VA of the Assessment Act applies is taken to be covered during the whole of the period by an insurance policy that provides private patient hospital cover.\n  (3) If the person’s income for surcharge purposes exceeds the person’s family tier 1 threshold, the amount of the levy that, apart from this section, would have been payable by the person under this Act for that year is to be increased:\n    (a) if this section applies to the person for the whole of the year of income—by the amount of 1% of the person’s taxable income; or\n    (b) if this section applies to the person for only some of the days in the year of income—by the amount worked out using the formula:\n    ![Start formula open bracket 1% of the person's taxable income close bracket times start fraction Number of those days over Number of days in the year of income end fraction end formula](image.004.png)\n  (4) Increase the amount of each percentage mentioned in subsection (3) by 0.25 of a percentage point if the person is a tier 2 earner for the year of income.\n  (5) Increase the amount of each percentage mentioned in subsection (3) by 0.5 of a percentage point if the person is a tier 3 earner for the year of income.","sortOrder":10},{"sectionNumber":"8D","sectionType":"section","heading":"Levy surcharge—person who is married during whole or part of a financial year","content":"#### 8D Levy surcharge—person who is married during whole or part of a financial year\n\n  (1) This section applies to a person during a period if during the whole of the period:\n    (a) the person is a married person; and\n    (b) the person or at least one of the person’s dependants (other than a dependant who is, or would, apart from subsection 251U(2) of the Assessment Act, be taken to be, a prescribed person) is not covered by an insurance policy that provides private patient hospital cover; and\n    (c) the person is not, or is taken under section 251VA of the Assessment Act not to be, a prescribed person.\n\n> Note 1: Subsection 251R(2) of the Assessment Act treats certain persons who are not married as if they were married.\n\n> Note 2: For dependant see sections 251R and 251V of the Assessment Act.\n\n> Note 3: For prescribed person see section 251U of the Assessment Act.\n\n  (2) For the purposes of paragraph (1)(b), a person to whom section 251VA of the Assessment Act applies is taken to be covered during the whole of the period by an insurance policy that provides private patient hospital cover.\n  (3) The amount of the levy that, apart from this section, would have been payable by a person under this Act for the year of income is to be increased by the amount of 1% of the person’s taxable income if:\n    (a) this section applies to the person for the whole of the year of income; and\n    (b) the sum of the person’s income for surcharge purposes and the person’s spouse’s income for surcharge purposes exceeds the person’s family tier 1 threshold; and\n    (c) the person’s income for surcharge purposes exceeds $27,222.\n  (4) The amount of the levy that, apart from this section, would have been payable by a person under this Act for the year of income, being a person to whom this section applies for only some of the days in the year of income, is to be increased by the amount worked out using the formula:\n  ![Start formula open bracket 1% of the person's taxable income close bracket times start fraction Number of those days over Number of days in the year of income end fraction end formula](image.005.png)\n  if:\n    (a) both of the following conditions are met if the person is married for the whole of the year of income:\n    (i) the sum of the person’s income for surcharge purposes and the person’s spouse’s income for surcharge purposes exceeds the person’s family tier 1 threshold;\n    (ii) the person’s income for surcharge purposes exceeds $27,222; or\n    (b) the person’s income for surcharge purposes exceeds the person’s family tier 1 threshold, if the person is married for only some of the year of income.\n  (4A) Increase the amount of each percentage mentioned in subsections (3) and (4) by 0.25 of a percentage point if the person is a tier 2 earner for the year of income.\n  (4B) Increase the amount of each percentage mentioned in subsections (3) and (4) by 0.5 of a percentage point if the person is a tier 3 earner for the year of income.\n  (5) In this section:\n\n> income for surcharge purposes, in relation to the person’s spouse, includes any share in the net income of a trust estate:\n\n    (a) to which the spouse is presently entitled as a beneficiary; and\n    (b) in respect of which the trustee of the trust estate in that capacity is liable to be assessed under section 98 of the Assessment Act.","sortOrder":11},{"sectionNumber":"8E","sectionType":"section","heading":"Levy surcharge for certain trustees—beneficiary a person to whom section 8B applies","content":"#### 8E Levy surcharge for certain trustees—beneficiary a person to whom section 8B applies\n\n  (1) This section applies to a person who is a beneficiary of a trust estate during a period if:\n    (a) section 8B applies to the beneficiary during the whole of the period; and\n    (b) the trustee of the trust estate in that capacity is liable to be assessed under section 98 of the Assessment Act in respect of a share of the net income of the trust estate to which the beneficiary is presently entitled (the beneficiary’s trust income).\n  (2) If the amount of the beneficiary’s trust income exceeds the beneficiary’s singles tier 1 threshold for the year of income, the amount of the levy that, apart from this section, would have been payable under this Act by the trustee in the capacity of trustee of the trust estate in relation to the beneficiary for the year of income is to be increased:\n    (a) if this section applies to the beneficiary for the whole of the year of income—by the amount of 1% of the beneficiary’s trust income; or\n    (b) if this section applies to the beneficiary for only some of the days in the year of income—by the amount worked out using the formula:\n    ![Start formula open bracket 1% of the beneficiary's trust income close bracket times start fraction Number of those days over Number of days in the year of income end fraction end formula](image.006.png)\n  (3) Increase the amount of each percentage mentioned in subsection (2) by 0.25 of a percentage point if the beneficiary is a tier 2 earner for the year of income.\n  (4) Increase the amount of each percentage mentioned in subsection (2) by 0.5 of a percentage point if the beneficiary is a tier 3 earner for the year of income.","sortOrder":12},{"sectionNumber":"8F","sectionType":"section","heading":"Levy surcharge for certain trustees—beneficiary a person to whom section 8C applies","content":"#### 8F Levy surcharge for certain trustees—beneficiary a person to whom section 8C applies\n\n  (1) This section applies to a person who is a beneficiary of a trust estate during a period if:\n    (a) section 8C applies to the beneficiary during the whole of the period; and\n    (b) the trustee of the trust estate in that capacity is liable to be assessed under section 98 of the Assessment Act in respect of a share of the net income of the trust estate to which the beneficiary is presently entitled (the beneficiary’s trust income).\n  (2) If the amount of the beneficiary’s trust income exceeds the beneficiary’s family tier 1 threshold, the amount of the levy that, apart from this section, would have been payable under this Act by the trustee in the capacity of trustee of the trust estate in relation to the beneficiary for the year of income is to be increased:\n    (a) if this section applies to the beneficiary for the whole of the year of income—by the amount of 1% of the beneficiary’s trust income; or\n    (b) if this section applies to the beneficiary for only some of the days in the year of income—by the amount worked out using the formula:\n    ![Start formula open bracket 1% of the beneficiary's trust income close bracket times start fraction Number of those days over Number of days in the year of income end fraction end formula](image.007.png)\n  (3) Increase the amount of each percentage mentioned in subsection (2) by 0.25 of a percentage point if the beneficiary is a tier 2 earner for the year of income.\n  (4) Increase the amount of each percentage mentioned in subsection (2) by 0.5 of a percentage point if the beneficiary is a tier 3 earner for the year of income.","sortOrder":13},{"sectionNumber":"8G","sectionType":"section","heading":"Levy surcharge for certain trustees—beneficiary a person to whom section 8D applies","content":"#### 8G Levy surcharge for certain trustees—beneficiary a person to whom section 8D applies\n\n  (1) This section applies to a person who is a beneficiary of a trust estate during a period if:\n    (a) section 8D applies to the beneficiary during the whole of the period; and\n    (b) the trustee of the trust estate in that capacity is liable to be assessed under section 98 of the Assessment Act in respect of a share of the net income of the trust estate to which the beneficiary is presently entitled (the beneficiary’s trust income).\n  (2) The amount of the levy that, apart from this section, would have been payable under this Act by the trustee in the capacity of trustee of the trust estate in relation to the beneficiary for the year of income is to be increased by 1% of the beneficiary’s trust income if:\n    (a) this section applies to the beneficiary for the whole of the year of income; and\n    (b) the sum of the beneficiary’s trust income and the beneficiary’s spouse’s income for surcharge purposes exceeds the beneficiary’s family tier 1 threshold; and\n    (c) the amount of the beneficiary’s trust income exceeds $27,222.\n  (3) If this section applies to the beneficiary for only some of the days in the year of income, the amount of the levy that, apart from this section, would have been payable under this Act by the trustee in the capacity of trustee of the trust estate in relation to the beneficiary for the year of income is to be increased by the amount worked out using the formula:\n  ![Start formula open bracket 1% of the beneficiary's trust income close bracket times start fraction Number of those days over Number of days in the year of income end fraction end formula](image.007.png)\n  if:\n    (a) in the case of a beneficiary who is a married person for the whole of the year of income:\n    (i) the sum of the beneficiary’s trust income and the beneficiary’s spouse’s income for surcharge purposes exceeds the beneficiary’s family tier 1 threshold; and\n    (ii) the beneficiary’s trust income exceeds $27,222; or\n    (b) in the case of a beneficiary who is a married person for only some of the year of income—the beneficiary’s trust income exceeds the beneficiary’s family tier 1 threshold.\n  (3A) Increase the amount of each percentage mentioned in subsections (2) and (3) by 0.25 of a percentage point if the beneficiary is a tier 2 earner for the year of income.\n  (3B) Increase the amount of each percentage mentioned in subsections (2) and (3) by 0.5 of a percentage point if the beneficiary is a tier 3 earner for the year of income.\n  (4) In this section:\n\n> income for surcharge purposes, in relation to the beneficiary’s spouse, includes any share in the net income of a trust estate:\n\n    (a) to which the spouse is presently entitled as a beneficiary; and\n    (b) in respect of which the trustee of the trust estate in that capacity is liable to be assessed under section 98 of the Assessment Act.","sortOrder":14},{"sectionNumber":"9","sectionType":"section","heading":"Reduction of levy—person who is prescribed person for part of year of income","content":"#### 9 Reduction of levy—person who is prescribed person for part of year of income\n\n  (1) In the case of a person who was a prescribed person during a part or parts only of the year of income, the amount of levy (other than an increase in the levy payable under section 8B, 8C, 8D, 8E, 8F or 8G) payable by the person but for this section shall be reduced by so much of that amount as bears to that amount the same proportion as the number of days in the part, or the sum of the numbers of days in the parts, of the year of income during which the person was a prescribed person bears to the number of days in the year of income.","sortOrder":15},{"sectionNumber":"9A","sectionType":"section","heading":"Adjustment of taxable income for lump sum payments in arrears","content":"#### 9A Adjustment of taxable income for lump sum payments in arrears\n\n  (1) This section applies to a person for a year of income if:\n    (a) the person’s assessable income for the year includes one or more eligible lump sums; and\n    (b) the total arrears amount is not less than 10% of the normal taxable income of the year; and\n    (c) in each relevant accrual year, one or more of the following applied:\n    (i) the sum of the person’s taxable income and the annual arrears amount for the year did not exceed the phase‑in limit;\n    (ii) under section 8, no levy was payable by the person on the person’s taxable income and, if the annual arrears amount for the year had been included in the person’s taxable income, either no levy would have been payable or the amount of levy would have been reduced;\n    (iii) under section 8, the amount of the levy payable by the person on the person’s taxable income was reduced, and would also have been reduced if the annual arrears amount for the year had been included in the person’s taxable income;\n    (iv) the person was a prescribed person for at least one day.\n\n> Note: For prescribed person, see section 251U of the Assessment Act.\n\n  (2) For the purposes of subsections 6(1) and 7(1) and (2), the person’s taxable income for the year of income is taken not to include the total arrears amount.\n  (3) For the purposes of working out, under section 8:\n    (a) whether levy is payable by the person on the person’s taxable income for the year of income; or\n    (b) whether the amount of levy payable by the person on the person’s taxable income for the year of income is to be reduced;\n  the person’s taxable income for the year of income is taken not to include the total arrears amount.\n\n> Note: This subsection does not affect the person’s taxable income for the purposes of working out, under section 8, the family income in relation to a spouse of the person.\n\n  (4) In this section:\n\n> accrual year has the meaning given by subsection 159ZR(1) of the Assessment Act.\n\n> annual arrears amount has the meaning given by subsection 159ZR(1) of the Assessment Act.\n\n> eligible lump sum has the meaning given by subsection 159ZR(1) of the Assessment Act.\n\n> normal taxable income has the meaning given by subsection 159ZR(1) of the Assessment Act.\n\n> relevant accrual years means:\n\n    (a) if there are 2 or more accrual years for the total arrears amount—the most recent 2 of those years; or\n    (b) in any other case—the accrual year for the total arrears amount.\n\n> total arrears amount has the meaning given by subsection 159ZR(1) of the Assessment Act.","sortOrder":16},{"sectionNumber":"10","sectionType":"section","heading":"Levy payable by a trustee assessable under section 98 of the Assessment Act","content":"#### 10 Levy payable by a trustee assessable under section 98 of the Assessment Act\n\n  (1) Where a person in the capacity of a trustee of a trust estate is liable to be assessed pursuant to section 98 of the Assessment Act in respect of a share of the net income of the trust estate to which a beneficiary is presently entitled, the amount of levy payable by the trustee upon that share of that net income shall not exceed the amount of levy that would be payable by the beneficiary if the amount of that share were the taxable income of the beneficiary.\n  (2) For the purposes of working out the amount of levy that would be payable by the beneficiary, any rebate that the trustee is entitled to under section 160AAAB of the Assessment Act is taken to be a rebate that the beneficiary is entitled to under section 160AAAA of that Act.","sortOrder":17},{"sectionNumber":"11","sectionType":"section","heading":"Financial years for which levy is payable","content":"#### 11 Financial years for which levy is payable\n\n  The levy imposed by this Act is levied, and shall be paid, for the financial year commencing on 1 July 1986 and for all subsequent financial years until the Parliament otherwise provides.","sortOrder":18}],"analysis":{"flash_summary":{"complexity_score":7,"scope_assessment":{"changed":false,"description":"Based only on the text supplied, the instrument establishes and governs the Medicare levy, its rate, exemptions, family tests, surcharges for lack of private patient hospital cover, trustee rules and special adjustments for lump sums. The supplied text does not indicate any change from an earlier or original statutory scope. This assessment is limited to the provisions provided and does not compare them to prior versions outside the supplied text."},"complexity_factors":["Numerous cross‑references to other statutes (Income Tax Assessment Act 1936, Income Tax Assessment Act 1997, Private Health Insurance Act 2007) for core definitions and rules (s.3, s.3A, s.4).","Multiple conditional surcharge regimes that vary by marital status and presence of dependants (s.8B, s.8C, s.8D) with pro‑rata part‑year formulas.","Trust‑specific rules that mirror and extend individual rules, plus a trustee liability ceiling tied to beneficiary position (s.8E–8G, s.10).","Special‑case adjustments such as lump sum arrears treatment that require reference to technical definitions in the Assessment Act (s.9A).","Numeric thresholds and phase‑in amounts defined separately and applied across provisions (s.3, s.7, s.8(5)), increasing calculation steps.","Tiered surcharge increases (tier 2 and tier 3 earner adjustments) that require cross‑statute determination of earner status (s.3A; s.8B–8D).","Interplay between family income tests, spouse income and trust income which creates multi‑party calculations and potential for income‑shifting strategies (s.8, s.8D(5), s.10)."],"plain_english_summary":"What this law does (mechanics)\n\n- The Act imposes the \"Medicare levy\": a tax charge on taxable income and certain trust income (see s.5 and s.6). The base rate is 2% of taxable income (s.6(1)). Trustees who are assessed under the Income Tax Assessment Act 1936 (the Assessment Act) pay at the same 2% rate in the circumstances described in s.6(2)–(6).\n- The Act exempts or reduces the levy for low incomes and phases in the charge as income rises (see s.7). The relevant numeric cutoff values (\"threshold amount\" and \"phase‑in limit\") are defined in s.3 and applied in s.7.\n- Household and family circumstances affect whether a person pays and how much. Section 8 provides a family‑income test and a formula that reduces the levy when family income is below a specified family income threshold (s.8(1)–(2), definition at s.8(5)).\n- The Act increases the levy (a surcharge) for people, or beneficiaries, who do not hold private patient hospital cover as defined in the Private Health Insurance Act 2007 and who exceed income thresholds. There are separate surcharge rules depending on marital status and whether the person has dependants (see s.8B for singles without dependants, s.8C for singles with dependants, and s.8D for married persons). Each of those sections increases the levy by a base percentage (generally 1% of taxable income) while providing formulas to pro‑rate the increase for part‑year exposure.\n- The surcharge percentage can be increased by 0.25 or 0.5 percentage points where a person qualifies as a tier 2 or tier 3 earner respectively (see s.3A(1) and the increases in s.8B(3)–(4), s.8C(4)–(5), s.8D(4A)–(4B)).\n- Trustees who distribute income to beneficiaries subject to surcharge rules are themselves exposed to increased levy amounts on the beneficiary’s share, with parallel trustee provisions in s.8E–8G. Section 10 limits trustee liability so the trustee’s levy cannot exceed what the beneficiary would have paid if that share were the beneficiary’s taxable income; rebates available to a trustee are treated, for calculation purposes, as if available to the beneficiary (s.10).\n- Where a person receives eligible lump sums in arrears, the Act can exclude the arrears amount from taxable income for the purposes of working out the levy under certain conditions (s.9A).\n- The Assessment Act (Income Tax Assessment Act 1936) is incorporated and read together with this Act (s.4), and many defined terms are imported from the Assessment Act, the Income Tax Assessment Act 1997 and the Private Health Insurance Act 2007 (see s.3 and s.3A).\n- The Act commenced on Royal Assent (s.2) and applies for financial years from 1 July 1986 onward until changed by Parliament (s.11).\n\nWho is affected\n\n- Individuals with taxable income above the thresholds (s.6, s.7, s.8). Low‑income individuals may pay no levy or a reduced amount (s.7).\n- Trustees of trusts and AMITs where trust income is assessed to beneficiaries (s.6(2)–(6), s.10, s.8E–8G).\n- People without private patient hospital cover who exceed specified income thresholds — they face an additional levy/surcharge (s.8B–8D). Those classified as tier 2 or tier 3 earners face higher surcharge rates (s.3A; s.8B(3)–(4)).\n\nWhy it matters (policy mechanisms and incentives)\n\n- Revenue and cost allocation. The Act raises revenue by adding a 2% levy on taxable income (s.6). That revenue is collected from individual taxpayers directly and, in some trust situations, from trustees (s.6, s.10).\n- Behavioural incentive to buy private hospital cover. The surcharge structure (s.8B–8D) increases the levy for people who are not covered by private patient hospital insurance and who exceed income thresholds. Mechanically, that creates a financial incentive for some taxpayers to obtain private hospital cover to avoid the surcharge (s.8B(2), s.8C(3), s.8D(3)).\n- Income‑timing and income‑splitting incentives. Because the levy and surcharges apply to taxable income and certain trust distributions (s.6, s.8E–8G), taxpayers and trustees may have incentives to manage timing of income, use trusts, or shift income between spouses to affect levy exposure. The Act contains trustee provisions that limit avoidance by taxing trustees on beneficiary entitlements (s.8E–8G, s.10), and incorporates many definitions from the Assessment Acts (s.3, s.4), which affects how those management strategies interact with broader tax rules.\n- Compliance and administrative complexity. The Act depends heavily on cross‑references to the Assessment Act, the Income Tax Assessment Act 1997 and the Private Health Insurance Act 2007 for definitions and calculations (s.3, s.3A, s.4). Those cross‑references, multiple conditional surcharge rules, pro‑rata formulas for part‑year situations (s.8B(2)(b), s.8C(3)(b), s.8D(4)), and special rules for lump sums (s.9A) raise the complexity of calculating correct liability and increase recordkeeping and reporting obligations for taxpayers, trustees and administrators.\n\nCosts, incentives, trade‑offs and implementation notes (source‑grounded)\n\n- Who pays: the statutory incidence falls on taxpayers (individuals and trustees) who have taxable income or trust income to which assessment rules apply (s.6, s.10). Family and low‑income tests in s.7 and s.8 can reduce or remove liability for some taxpayers.\n- Who decides: liability is determined by automated tax rules and definitions imported from the Assessment Acts and the Private Health Insurance Act (s.3, s.4). Administrative discretion in the Act itself is limited; most outcomes follow formulae and threshold tests, but correct application depends on facts (marital status, dependants, private insurance coverage) recorded and interpreted under related Acts (s.3, s.8B–8D).\n- Compliance burden: taxpayers must determine marital and dependant status, private patient hospital cover status, tier classification, trust entitlements, and possible lump sum adjustments (s.3, s.3A, s.8B–8G, s.9A). Trustees must track beneficiary entitlements and may be assessed (s.6(2)–(6), s.8E–8G, s.10).\n- Incentive effects on markets: by increasing levy for those without private hospital cover (s.8B–8D), the Act creates a monetary incentive that can affect demand for private hospital insurance. The Act does not itself regulate insurance supply or prices; any market effects arise from individuals’ responses to the surcharge.\n- Anti‑avoidance feature and offsetting trustee rules: the trustee surcharge provisions (s.8E–8G) and the trustee ceiling in s.10 limit simple shifting of income to avoid the levy, by ensuring trustees can be charged in line with what beneficiaries would owe.\n- Implementation risk and opportunity cost: correct application requires integration with other taxation and insurance statutes (s.3, s.4). That raises the risk of mistakes and the administrative cost of aligning income definitions, benefit entitlements and private cover status across multiple statutory regimes.\n\nPrimary sections to consult for calculation and practical effect: s.6 (rate), s.7 (small incomes/exemptions), s.8 (family reductions), s.8B–8D (surcharges by family/dependant/marriage status), s.8E–8G (trustee surcharges), s.9A (lump sums), s.10 (trustee ceiling), s.3 and s.3A (definitions and imported terms), s.4 (incorporation of Assessment Act)."},"summary":{"complexity_score":8,"scope_assessment":{"changed":true,"description":"The original Act imposed a straightforward Medicare Levy at a flat rate on taxable income. Over time, its scope expanded significantly to include: the Medicare Levy Surcharge for high-income earners without private hospital cover (sections 8B–8G); tiered surcharge rates linked to income brackets defined in private health insurance legislation; complex trust and AMIT provisions; lump sum arrears adjustments; and family/dependant-based thresholds. What began as a simple funding mechanism for Medicare has grown into a multi-tiered instrument that also serves as a policy tool to incentivise private health insurance uptake among higher earners."},"complexity_factors":["Extensive cross-referencing to multiple other Acts (Income Tax Assessment Act 1936, Income Tax Assessment Act 1997, Private Health Insurance Act 2007, A New Tax System (Family Assistance) Act, A New Tax System (Medicare Levy Surcharge—Fringe Benefits) Act 1999) — meaning this Act cannot be understood in isolation","Multiple layered threshold calculations that differ based on marital status, dependants, and income tier (Tier 1, 2, 3), requiring readers to navigate several Acts simultaneously","Separate and complex rules for trustees of trust estates and AMITs (Attribution Managed Investment Trusts), including parallel surcharge provisions across sections 8E, 8F and 8G mirroring sections 8B, 8C and 8D","The Medicare Levy Surcharge operates as a conditional add-on that interacts with private health insurance coverage rules defined in yet another Act, with pro-rata daily calculations adding arithmetic complexity","Special 'phase-in' and 'threshold' rules to prevent cliff-edge tax increases require formulaic calculations rather than simple fixed amounts","Lump sum arrears adjustment provisions (section 9A) involve backward-looking accrual year analysis requiring historical income comparisons","Marital status rules include edge cases (e.g. spouse dying during the income year) with deemed continuation of marriage for certain purposes but not others","Dollar thresholds embedded directly in the legislation (e.g. $27,222, $45,907, $43,020) become outdated over time and require cross-referencing with annual indexation elsewhere","The modification of Private Health Insurance Act provisions within this Act (section 3A subsection 3) — essentially rewriting another Act's provisions — is an unusual and confusing drafting technique"],"plain_english_summary":"## Medicare Levy Act 1986 — What It Means For You\n\nThis law is the legal foundation for the **Medicare Levy** — the extra charge on your taxable income (the income you pay tax on) that helps fund Australia's public healthcare system, Medicare.\n\n### The Basic Rate\nMost Australians pay **2% of their taxable income** as the Medicare Levy on top of their regular income tax. This applies to individuals, and also to trustees (people who manage money or assets on behalf of others through a legal arrangement called a trust).\n\n### Who Pays Less — or Nothing?\n- **Low income earners** are protected. If your income is below a set threshold (currently around **$27,222** for most people, or **$43,020** if you receive a certain pension rebate), you pay **no Medicare Levy at all**.\n- If your income sits just above those thresholds, a special rule caps how much levy you pay — so you're not suddenly hit with the full 2% the moment you earn one extra dollar.\n- **Families and couples** get more generous thresholds. If the combined income of your household is low enough, you may pay nothing. The threshold increases for each dependent child you have.\n- People who are classed as **\"prescribed persons\"** (for example, certain foreign residents or people eligible for free government healthcare for other reasons) can have their levy reduced for the days they qualify.\n\n### The Medicare Levy Surcharge — A Penalty for High Earners Without Private Health Insurance\nIf you earn above a certain income and **don't have private hospital cover** (private health insurance that covers hospital treatment), you'll pay an **extra surcharge on top of the standard 2%**:\n- **Singles earning above ~$93,000/year** (Tier 1): an extra **1%**\n- **Tier 2 earners** (higher income bracket): an extra **1.25%**\n- **Tier 3 earners** (highest income bracket): an extra **1.5%**\n\nDifferent rules apply depending on whether you're single, single with kids, or married/partnered. The surcharge is designed to encourage higher earners to take out private health insurance and reduce pressure on the public hospital system.\n\n### Lump Sum Payments\nIf you receive a large **back-payment** of income that was owed to you from previous years (like unpaid wages), special rules apply so you don't get unfairly penalised with a higher levy just because a big payment lands in one year.\n\n### Trusts\nPeople who manage **trust funds** on behalf of beneficiaries (the people who receive money from those funds) may also need to pay the Medicare Levy on income distributed through the trust — though caps apply to prevent beneficiaries being overtaxed.\n\n### Bottom Line\n- Almost every working Australian is affected by this Act.\n- The levy funds Medicare — your ability to see a doctor or go to a public hospital.\n- Higher earners without private hospital cover pay more.\n- Lower earners and families are protected with reduced or zero levy obligations."},"issue_detection":{"absurdities":[{"type":"other","section":"3 - definition of 'phase-in limit' and 'threshold amount'","severity":"medium","reasoning":"Legislation with sequential paragraph labels (a), (c) — omitting (b) — implies a former paragraph (b) was repealed but the remaining paragraphs were not renumbered. While not logically impossible to apply, it creates interpretive uncertainty about whether the gap is intentional and whether any scenario falls into a void between the two remaining paragraphs. If there was once a category (b) covering a specific class of person, those persons may now be uncategorised.","confidence":0.82,"description":"The definitions of 'phase-in limit' and 'threshold amount' contain paragraphs labelled (a) and (c), skipping paragraph (b) entirely. This creates a legislative gap and suggests deleted provisions were never renumbered, leaving a structural hole in the definitions that a court or administrator must navigate."},{"type":"self_contradicting","section":"3(3) and 3(3A)","severity":"low","reasoning":"The general deeming in s3(3)(b) applies for the whole Act unless displaced. Section 3(3A) then creates a more specific rule for ss8B-8D covering the same period. The two interact awkwardly: s3(3)(b) deems marriage on the last day of the year, while s3(3A) deems marriage for the entire post-death period. For the purposes of ss8B-8D, both deeming provisions could apply simultaneously, potentially treating the person as married for the full period and also specifically for the post-death period under s3(3A), serving no additional purpose and creating interpretive confusion.","confidence":0.65,"description":"A deceased person is simultaneously 'deemed' to be alive and married to the surviving spouse for different purposes under the same Act. Subsection 3(3)(b) deems a couple married on the last day of the year of income where the spouse died during that year. Subsection 3(3A) then separately deems the living person to be married to the deceased person from the date of death to 30 June. This means there is a period (from death to 30 June) where the surviving spouse is simultaneously married (for sections 8B, 8C, 8D) and also deemed married on the last day (for general purposes), potentially creating double-counting or conflicting treatment of the same person."},{"type":"other","section":"7(3) and 7(4)","severity":"low","reasoning":"While not logically contradictory, the static $416/$520 thresholds in ss7(3)-(4) contrast sharply with the updated dollar figures throughout the rest of the Act. This is likely an oversight — the figures correspond to amounts in the Income Tax Assessment Act 1936 for trust taxation that were not updated in parallel. The result is a conceptually coherent but practically absurd provision that applies to vanishingly few real-world trust situations.","confidence":0.75,"description":"Subsection 7(3) exempts trust net income not exceeding $416 from levy where the trustee is assessed under section 99 of the Assessment Act. Subsection 7(4) then provides a phase-in cap for trust net income between $416 and $520 also under section 99. However, the threshold of $416 and the upper limit of $520 appear to be frozen legacy amounts that have never been indexed, unlike the personal threshold amounts in s3 which reference specific dollar figures for named rebate holders. This creates a structural asymmetry where trust income thresholds are petrified at what appear to be historical values while personal thresholds are periodically updated, meaning the small income concession for trusts has eroded to near-irrelevance."},{"type":"other","section":"8D(3)(c) and 8D(4)(a)(ii)","severity":"medium","reasoning":"The $27,222 figure in s8D(3)(c) and s8D(4)(a)(ii) mirrors the 'threshold amount' definition in s3(c) but is not defined by reference to it. Legislative drafting best practice would use the defined term. As a result, if Parliament amends the threshold amount in s3, the $27,222 in s8D will not automatically update. This creates a latent structural inconsistency — a person could be exempt from basic levy under s7 but still liable for the surcharge under s8D, or vice versa, depending on which figure is current.","confidence":0.88,"description":"Section 8D imposes the Medicare levy surcharge on married persons who lack private hospital cover, but conditions it in part on the person's income for surcharge purposes exceeding $27,222 (a hard-coded dollar figure). This figure is identical to the 'threshold amount' for persons not entitled to the section 160AAAA rebate, as defined in section 3, but is hard-coded rather than cross-referenced. If the threshold amount in s3 is ever updated by legislative amendment, this hard-coded figure in s8D will become inconsistent, silently creating a divergence between the levy exemption threshold and the surcharge trigger threshold."},{"type":"other","section":"8G(2)(c) and 8G(3)(a)(ii)","severity":"medium","reasoning":"Same reasoning as the s8D issue. The $27,222 figure is replicated without cross-referencing the defined term, creating a risk of silent divergence upon any amendment to the s3 threshold amount definition.","confidence":0.88,"description":"Section 8G, mirroring the issue in s8D, hard-codes $27,222 as a surcharge trigger for beneficiaries of trust estates who are married persons, with the same latent inconsistency problem described above regarding divergence from the defined threshold amount in section 3."},{"type":"self_contradicting","section":"8E(1)(a) - interaction with 8B(1) applicability","severity":"medium","reasoning":"A beneficiary's 'income for surcharge purposes' under ITAA 1997 is a broader concept than just their trust income share. Section 8B is triggered by total income for surcharge purposes exceeding the threshold; s8E is triggered by trust income alone exceeding the threshold. If a beneficiary has low trust income but high other income (triggering s8B), the trustee may escape s8E. Conversely, if the beneficiary has high trust income but low total income for surcharge purposes (unlikely but possible with deductions), s8B may not apply at all, yet the trustee could theoretically be assessed. The asymmetry is a structural flaw.","confidence":0.72,"description":"Section 8E applies to a trustee where 'section 8B applies to the beneficiary during the whole of the period.' However, s8B imposes the surcharge only if the beneficiary's income for surcharge purposes exceeds their singles tier 1 threshold (s8B(2)). Section 8E(2) then separately tests whether the 'beneficiary's trust income' exceeds that threshold. This means the surcharge trigger for the trustee (trust income alone) differs from the surcharge trigger for the individual beneficiary (total income for surcharge purposes), potentially imposing surcharge on the trustee in circumstances where, if the beneficiary were assessed directly, no surcharge would arise, and vice versa."},{"type":"other","section":"9A(1)(c)(ii) and (iii) - interaction with s8","severity":"low","reasoning":"The structure of s9A(1)(c) is logically valid as alternatives, but the embedded disjunction in condition (ii) ('either no levy would have been payable or the amount of levy would have been reduced') is imprecise. 'The amount would have been reduced' under s8 refers to the reduction mechanism in s8(2), not a general reduction. A careful reader must determine whether 'reduced' here means the formal s8 reduction or any lesser amount. The provision is not impossible to apply but is ambiguous at its margins.","confidence":0.6,"description":"Section 9A(1)(c)(ii) requires that 'no levy was payable' under s8, while s9A(1)(c)(iii) requires that 'the amount of levy was reduced' under s8. These are presented as alternative conditions in a single paragraph (c) using 'one or more of the following applied.' However, conditions (ii) and (iii) are partially overlapping and partially mutually exclusive — if no levy is payable, it cannot also be 'reduced.' The drafting is internally coherent only because (ii) and (iii) are alternatives, but the second half of condition (ii) — 'if the annual arrears amount had been included, either no levy would have been payable OR the amount would have been reduced' — creates a disjunctive within a condition that could result in s9A relief being triggered even where the arrears amount would have increased, not decreased, total levy."}],"contradictions":[{"severity":"low","section_a":"3(3)(b)","section_b":"3(3A)","confidence":0.68,"description":"Section 3(3)(b) deems a surviving spouse to have been married to a deceased spouse on the last day of the year of income (for general purposes across the Act). Section 3(3A) then separately deems the surviving spouse to be married to the deceased from the date of death to 30 June (for sections 8B, 8C and 8D only). For those three sections, both deeming provisions could simultaneously apply, creating two overlapping fictional marital statuses for the same person for the same period, one of which (s3(3A)) is supposedly the specific carve-out but covers a longer period than the single-day fiction in s3(3)(b)."},{"severity":"high","section_a":"8(1) - family income threshold exemption","section_b":"8D(3) - Medicare levy surcharge for married persons","confidence":0.85,"description":"Section 8(1) provides that no levy is payable where family income does not exceed the family income threshold. Section 8D(3) imposes a surcharge on married persons who lack private hospital cover. These provisions interact perversely: a married person could have family income below the s8 family income threshold (meaning the base levy is zero), yet still be subject to the s8D surcharge if income for surcharge purposes individually exceeds $27,222 and the combined threshold is exceeded. The surcharge would then apply to a person who is otherwise exempt from the base levy, meaning the surcharge would be imposed as the sole levy charge — a surcharge with nothing to surcharge."},{"severity":"low","section_a":"6(1) - 2% rate on taxable income","section_b":"7(1) - no levy below threshold amount","confidence":0.55,"description":"Section 6(1) states the rate of levy 'payable by a person upon a taxable income is 2%' without qualification. Section 7(1) then provides that no levy is payable where taxable income does not exceed the threshold amount. Read literally, s6(1) imposes levy at 2% on all taxable income, while s7(1) then exempts persons below the threshold. The Act does not explicitly state that s7 operates as an exception to s6 — s6 purports to set a universal rate. While the practical result is clear from context and the structure of Part VIIB of the Assessment Act, the drafting creates an apparent conflict between an unqualified rate-setting provision and an exemption provision with no express override language."},{"severity":"medium","section_a":"8B(2) - surcharge threshold: singles tier 1 threshold (income for surcharge purposes)","section_b":"8E(2) - trustee surcharge threshold: singles tier 1 threshold (trust income only)","confidence":0.78,"description":"For an individual beneficiary under s8B, the surcharge is triggered when 'income for surcharge purposes' exceeds the singles tier 1 threshold — a broad income concept. For the trustee assessed under s8E in respect of the same beneficiary, the trigger is when the 'beneficiary's trust income' exceeds the same threshold — a narrower income concept. The same threshold is thus applied to different income bases depending on who is assessed, which can produce materially different outcomes for the same economic situation."},{"severity":"medium","section_a":"8(5) - family income definition (taxable income of person and spouse)","section_b":"8D(5) - income for surcharge purposes of spouse includes trust income share","confidence":0.8,"description":"The definition of 'family income' in s8(5) uses 'taxable income' of both spouses for the purpose of the basic levy reduction. Section 8D(5) expands 'income for surcharge purposes' of a spouse to include trust income shares for the surcharge calculation. This means the same spouse's income is measured differently depending on whether the base levy reduction (s8) or the surcharge (s8D) is being calculated, potentially creating asymmetric outcomes where a couple's combined income clears the s8D surcharge threshold but not the s8 family income threshold (or vice versa), due to the differing income bases."}]},"kimi_summary":{"content_quality":"ok","complexity_score":7,"scope_assessment":{"changed":true,"description":"The original 1986 Act was a straightforward 2% levy on taxable income with basic low-income exemptions. It has expanded significantly to include: (1) the Medicare Levy Surcharge (MLS) system added to incentivise private health insurance uptake; (2) tiered income thresholds (tier 1/2/3) creating progressive surcharge rates; (3) complex trust provisions including modern AMIT (attribution managed investment trust) rules; (4) intricate family income testing and spouse income aggregation; and (5) anti-avoidance provisions for lump sum arrears. The legislation now functions as much as a private health insurance incentive mechanism as a simple revenue-raising measure for Medicare."},"complexity_factors":["Extensive cross-referencing to other Acts (Income Tax Assessment Act 1936, Income Tax Assessment Act 1997, Private Health Insurance Act 2007, A New Tax System (Medicare Levy Surcharge—Fringe Benefits) Act 1999, A New Tax System (Family Assistance) (Administration) Act 1999)","Multiple defined terms (12+ definitions in section 3 alone, including tiered earner definitions requiring lookup in separate legislation)","Nested conditional logic in surcharge calculations (sections 8B-8G) with tiered income thresholds and varying percentages based on marital status, dependants, and insurance coverage","Complex formulas for partial year calculations and income splitting between spouses","Multiple exceptions and special cases (prescribed persons, deceased spouses, lump sum arrears adjustments in section 9A)","Trustee liability provisions spanning sections 6, 8E-8G, and 10 with different rules for different trust types (standard trusts vs AMITs)","Incorporation by reference of entire Assessment Act (section 4) creating implicit dependencies"],"plain_english_summary":"This law sets up the **Medicare levy** — the 2% tax most Australians pay on their taxable income to help fund the public health system (Medicare).\n\n**What it does:**\n- **Imposes the levy**: Charges 2% of taxable income for most people, including individuals, trustees of trusts, and certain investment trusts (AMITs).\n- **Provides exemptions and reductions**: People with low incomes pay less or nothing. The thresholds vary depending on whether you're single, married, or have children.\n- **Adds a surcharge for high-income earners without private health insurance**: If you earn above certain income thresholds and don't have private hospital cover, you pay an extra 1% to 1.5% on top of the standard 2% levy. This increases to 1.25% or 1.5% for higher income tiers (tier 2 and tier 3 earners).\n- **Handles special situations**: Includes rules for trustees paying levy on behalf of beneficiaries, adjustments for lump sum payments received late, and definitions for who counts as married or having dependants.\n\n**Who it affects:**\n- Virtually every Australian taxpayer\n- Trustees of trusts who pay tax on behalf of beneficiaries\n- High-income earners deciding whether to buy private health insurance (to avoid the surcharge)\n\n**Why it matters:**\nThis is the legal foundation for how Australia funds its universal healthcare system. The surcharge provisions are particularly significant — they create a financial incentive for higher earners to take out private health insurance, which is designed to reduce pressure on the public system."}},"importantCases":[],"_links":{"self":"/api/acts/medicare-levy-act-1986","history":"/api/acts/medicare-levy-act-1986/history","analysis":"/api/acts/medicare-levy-act-1986/analysis","conflicts":"/api/acts/medicare-levy-act-1986/conflicts","importantCases":"/api/acts/medicare-levy-act-1986/important-cases","documents":"/api/acts/medicare-levy-act-1986/documents"}}