Tax payers in Australia pay a Medicare levy of 2% of their taxable income.
In addition to this levy, tax payers who earn over the threshold pay amounts of $90,000 for an individual, and $180,000 for families, will have to pay a Medicare levy surcharge if they do not have Private Health insurance. For more information on Medicare see our Medicare Levy Surcharge page.
If you do not have private heath insurance for the full year, you will be required to pay the surcharge for the percentage of time you were not covered.
The surcharge can be a significant amount for taxpayers whose taxable income is above the threshold. It most cases, it is more cost effective for these taxpayers to take out private health insurance rather than pay the levy.
See our How It Works page and follow the steps to lodge your tax online.
Private Health insurance must meet the criteria outlined by the tax office, and must be in place for the full year in order to get an exemption from the Medicare levy surcharge. This area is quite complicated and it is advisable to talk to your tax agent before trying to lodge your return.
Understanding the Meicare levy and Private Health cover in Australia
Watch this video for an explanation on how the ATO taxes those with no Private health cover.