Fairer Private Health Insurance Incentives (Medicare Levy Surcharge—Fringe Benefits) Act 2012

Administered by Department of the Treasury

Legislation au C2012A00028 In force Act

Legislation content

 

 

 

 

 

 

Fairer Private Health Insurance Incentives (Medicare Levy Surcharge—Fringe Benefits) Act 2012

 

No. 28, 2012

 

 

 

 

 

An Act to amend the A New Tax System (Medicare Levy Surcharge—Fringe Benefits) Act 1999, and for related purposes

 

 

Contents

1 Short title

2 Commencement

3 Schedule(s)

Schedule 1—Amendments

A New Tax System (Medicare Levy Surcharge—Fringe Benefits) Act 1999

 

 

 

Fairer Private Health Insurance Incentives (Medicare Levy Surcharge—Fringe Benefits) Act 2012

No. 28, 2012

 

 

 

An Act to amend the A New Tax System (Medicare Levy Surcharge—Fringe Benefits) Act 1999, and for related purposes

[Assented to 4 April 2012]

The Parliament of Australia enacts:

1  Short title

  This Act may be cited as the Fairer Private Health Insurance Incentives (Medicare Levy Surcharge—Fringe Benefits) Act 2012.

2  Commencement

 (1) Each provision of this Act specified in column 1 of the table commences, or is taken to have commenced, in accordance with column 2 of the table. Any other statement in column 2 has effect according to its terms.

 

Commencement information

Column 1

Column 2

Column 3

Provision(s)

Commencement

Date/Details

1.  Sections 1 to 3 and anything in this Act not elsewhere covered by this table

The day this Act receives the Royal Assent.

4 April 2012

2.  Schedule 1

At the same time as Schedule 1 to the Fairer Private Health Insurance Incentives Act 2012 commences.

1 July 2012

Note: This table relates only to the provisions of this Act as originally enacted. It will not be amended to deal with any later amendments of this Act.

 (2) Any information in column 3 of the table is not part of this Act. Information may be inserted in this column, or information in it may be edited, in any published version of this Act.

3  Schedule(s)

  Each Act that is specified in a Schedule to this Act is amended or repealed as set out in the applicable items in the Schedule concerned, and any other item in a Schedule to this Act has effect according to its terms.


Schedule 1—Amendments

 

A New Tax System (Medicare Levy Surcharge—Fringe Benefits) Act 1999

1  Subsection 3(1) (definition of family surcharge threshold)

Repeal the definition.

2  Subsection 3(1)

Insert:

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.

3  Subsection 3(1) (definition of singles surcharge threshold)

Repeal the definition.

4  Subsection 3(1)

Insert:

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.

5  Subsection 3(1)

Insert:

tier 2 earner has the meaning given by section 6.

6  Subsection 3(1)

Insert:

tier 3 earner has the meaning given by section 6.

7  Sections 5A and 6

Repeal the sections, substitute:

6  What is a tier 2 earner and tier 3 earner

 (1) Subject to this section, for the purposes of this Act:

 (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

 (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.

 (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).

 (3) Replace paragraph 22‑30(1)(b) of the Private Health Insurance Act 2007 with the following paragraph:

 (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):

8  Paragraph 12(1)(a)

Omit “the singles surcharge threshold”, substitute “the person’s singles tier 1 threshold”.

9  At the end of section 12

Add:

 (4) Increase the amount of each percentage mentioned in subsections (2) and (3) by 0.25 of a percentage point if the person is a tier 2 earner for the year of income.

 (5) Increase the amount of each percentage mentioned in subsections (2) and (3) by 0.5 of a percentage point if the person is a tier 3 earner for the year of income.

10  Paragraph 13(1)(a)

Omit “family surcharge threshold”, substitute “family tier 1 threshold”.

11  At the end of section 13

Add:

 (5) 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.

 (6) 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.

12  Paragraph 15(1)(b)

Omit “family surcharge threshold”, substitute “family tier 1 threshold”.

13  At the end of section 15

Add:

 (3) Increase the amount of the percentage mentioned in subsection (1) by 0.25 of a percentage point if the person is a tier 2 earner for the year of income.

 (4) Increase the amount of the percentage mentioned in subsection (1) by 0.5 of a percentage point if the person is a tier 3 earner for the year of income.

14  Paragraph 16(2)(b)

Omit “family surcharge threshold”, substitute “family tier 1 threshold”.

15  Paragraph 16(3)(b)

Omit “family surcharge threshold”, substitute “family tier 1 threshold”.

16  After subsection 16(4)

Insert:

 (4A) Increase the amount of the percentage mentioned in subsection (4) by 0.25 of a percentage point if the person is a tier 2 earner for the year of income.

 (4B) Increase the amount of the percentage mentioned in subsection (4) by 0.5 of a percentage point if the person is a tier 3 earner for the year of income.

17  Application

The amendments made by this Schedule apply to the 2012‑13 year of income and later years of income.

 

 

 

[Minister’s second reading speech made in—

House of Representatives on 7 July 2011

Senate on 27 February 2012]

(106/11)

 

Overview

The Fairer Private Health Insurance Incentives (Medicare Levy Surcharge—Fringe Benefits) Act 2012, enacted by the Parliament of Australia on 4 April 2012, aims to amend the A New Tax System (Medicare Levy Surcharge—Fringe Benefits) Act 1999. This legislation responds to a perceived need for a more equitable approach to private health insurance incentives, specifically addressing how the Medicare Levy Surcharge is applied in relation to fringe benefits. The Act seeks to align the thresholds and calculations for the surcharge more closely with the thresholds set out in the Private Health Insurance Act 2007, thereby ensuring that the financial incentives for private health insurance are fairer and more consistent across different types of taxpayers. The policy objective is to provide a more coherent and equitable framework that reflects the current private health insurance landscape and supports the broader goals of the government's health policy.

Scope and Application

The Fairer Private Health Insurance Incentives (Medicare Levy Surcharge—Fringe Benefits) Act 2012 is an Act of the Commonwealth of Australia that amends the A New Tax System (Medicare Levy Surcharge—Fringe Benefits) Act 1999. This Act applies to all individuals and entities subject to the Medicare Levy Surcharge under the 1999 Act, with a particular focus on those who are eligible for private health insurance and the associated financial benefits and surcharges. The Act applies to the Commonwealth jurisdiction and affects individuals who earn above a certain income threshold and do not have adequate private health insurance cover. The amendments introduced by this Act, which include the repeal and substitution of various definitions and thresholds, took effect from the 2012-13 year of income onwards. The Act does not specify any exclusions or exemptions, meaning that it broadly applies to all persons and entities subject to the Medicare Levy Surcharge as defined in the 1999 Act. Additionally, the Act may be further extended or modified through subordinate instruments, although the primary changes are detailed within the Act itself.

Key Provisions

The Fairer Private Health Insurance Incentives (Medicare Levy Surcharge—Fringe Benefits) Act 2012 amends the A New Tax System (Medicare Levy Surcharge—Fringe Benefits) Act 1999. This legislation primarily alters the thresholds and definitions related to the Medicare Levy Surcharge (MLS) and fringe benefits tax. For instance, it repeals the definitions of family surcharge threshold and singles surcharge threshold in section 3(1) of the 1999 Act and replaces them with family tier 1 threshold and singles tier 1 threshold, respectively (Schedule 1, items 1 and 3). It also introduces new definitions for tier 2 earner and tier 3 earner based on the Private Health Insurance Act 2007 (Schedule 1, items 5 and 6). The Act imposes certain obligations on taxpayers, employers, and other entities involved in the calculation and payment of the MLS and fringe benefits tax. For example, taxpayers must now consider their tier status (tier 2 or tier 3) when calculating their MLS liability, which involves increases in the percentage rates specified in the 1999 Act (Schedule 1, items 8 to 16). Employers must also be aware of these changes when determining the taxable value of fringe benefits provided to employees, particularly for those classified as tier 2 or tier 3 earners. These obligations are effective from the 2012-13 year of income onwards. The Act does not explicitly outline specific offences or penalties for non-compliance with its provisions. However, breaches of the A New Tax System (Medicare Levy Surcharge—Fringe Benefits) Act 1999, as amended by this Act, could result in penalties under that legislation. For instance, penalties for failing to lodge a tax return or provide necessary information may include fines and imprisonment. Additionally, incorrect calculation and payment of the MLS could lead to financial penalties and interest on the underpaid amount. The exact penalties and enforcement mechanisms would be governed by the broader tax laws of Australia.

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Sourced from the Federal Register of Legislation at 26 August 2026. For the latest information on Australian Government law please go to https://www.legislation.gov.au.