Medicare Levy Question (NOT Surcharge) for Tax Return Time

Lpapaya on 01/08/2022 - 22:50

Hi there! Sorry if this is a dumb question. I don't have a tax accountant and I'm lodging a couple years of taxes late

I am getting slammed with a few thousand dollars for each year for the Medicare Levy (not the surcharge) resulting in a hefty tax bill considering I am a regular salaried worker. Is this normal?

I would have expected that the Medicare Levy tax would have been withheld like normal income tax by my employer during the year, so that at EOFY I don't have to find $2-3K+ to pay the levy with.

Financial Medicare

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closed Comments

  • avoidfullprice on 01/08/2022 - 22:54

    It’s not normal. Talk to your HR ASAP

    • whoamitoblame on 01/08/2022 - 22:56
      -2

      HR doesn't know whether you have PHI or not, so I imagine they wouldn't withhold it.

      • CaptainHoltisDad on 01/08/2022 - 23:08
        +3

        OP said this not related to the Medicare Levy Surcharge, so it's independent of PHI

    • netjock on 02/08/2022 - 10:25

      OP probably has other income therefore withholding doesn't include that amount.

  • CaptainHoltisDad on 01/08/2022 - 23:08
    +2

    https://www.ato.gov.au/Individuals/Medicare-and-private-heal…

    The Medicare levy is collected from you in the same way as income tax. Generally, the pay as you go amount your employer withholds from your salary or wages includes an amount to cover the Medicare levy.

  • tsunamisurfer on 01/08/2022 - 23:18
    +5

    I am getting slammed with a few thousand dollars for each year for the Medicare Levy

    How do you know this?

    You could be getting slammed because your PAYG amounts weren't enough to cover your total tax bill, your employer doesn't know about your other forms of income.

    The PAYF witholding amounts are clearly governed by the ATO, there is a calculator and a set of tables that tells your payroll guy how much to withold.

    • avoidfullprice on 01/08/2022 - 23:25
      +1

      That would happen if salary is less than the medicare levy threshold, but total taxable income is above 2k / 2% = 100k. Thats a lot of other income, also the tax debt will be more than that!

  • avoidfullprice on 01/08/2022 - 23:19
    +1

    Another possibility of your tax shortfall is you are doing salary sacrificing into your super, but you have a hecs debt. Your payroll people will withhold less PAYG like you are on lower hecs repayment rate, but your reportable income remains the same, so you are 2-3k short each year at tax time

    Third possibility is you work in levy exempt occupation but you declare as if you dont have that exemption…

  • cheapjunkie on 01/08/2022 - 23:21
    +3

    You may have a HECS debt that could be causing this and if you had not informed HR then you would be getting PAYG tax withholding at a lower rate.

    • original15 on 02/08/2022 - 10:33
      -1

      Would suck if that’s the case given the tax/hecs withheld from fortnightly pay doesn’t reduce your hecs debt until you file the tax return, so OP has been copping annual indexation on the whole amount

  • plmko on 01/08/2022 - 23:23
    +1

    Why do people care about withholding so much. If it were up to me I'd have zero withholding and pay it all off 1.5 years after the financial year.

    • morse on 02/08/2022 - 03:51
      +3

      Because they spend everything they earn.

      • filmer on 02/08/2022 - 09:16

        People even get their pay to be calculated as if it's a second job so more tax is taken out. This is the only way they can save. It's quite sad.

  • morse on 02/08/2022 - 03:50
    +2

    I’d highly recommend using an accountant. They generally save you more than they cost, unless you’re really savvy with all the taxation rules and processes (which it sounds like you’re not). They can also save you from being fined for submitting it late. Ask friends and colleagues for a good accountant recommendation.

  • geekcohen on 02/08/2022 - 05:54

    Use an accountant because you can claim it on the next year's tax return so it really costs you nothing. My wife and I have for a number of years now and have seen the benefits. Just easier and they know what you can claim and what you cannot or what the threshold is.

    It sounds like something isn't right if you have to pay the ATO.

    • SBOB on 02/08/2022 - 06:16
      +14

      Use an accountant because you can claim it on the next year's tax return so it really costs you nothing

      An accountant can also teach you that being able to claim something on a tax return doesn't make it 'cost you nothing'

      • MS Paint on 02/08/2022 - 06:22
        +1

        I was thinking the same. Best case scenario is maybe a 48% discount.

      • geekcohen on 02/08/2022 - 07:45

        Okay, maybe a poor choice of words, but you get what I mean.

  • spal on 02/08/2022 - 08:33

    If it is only because of medicare levy, this could be because when you started your job at the current employer either your declared that you are exempt from medicare levy (some non-citizens are not eligible for medicare services and need to have PHI) and now your status has changed. You are probably better off lodging a new TFN declaration considering your current situation.

    • ZenderBing on 02/08/2022 - 10:21

      How does new TFN help? I am just curious

      • freefall101 on 02/08/2022 - 10:30
        +2

        TFN declaration is what you lodge with your employer telling them what your TFN is and all the details attached (residency, exemptions, etc). It's not requesting a new TFN.

        • ZenderBing on 02/08/2022 - 13:06
          +1

          Aah gotcha..
          Thank you for answering my stupid question.

  • freefall101 on 02/08/2022 - 10:28

    You can check what should be withheld from your pay going by the ATOs withholding calculator - https://www.ato.gov.au/Calculators-and-tools/Tax-withheld-ca…

    Sounds to me like you might have ticked that you're exempt from the medicare levy if it works out to about the right amount. Or, as others have suggested, it's HECS related.

  • AndyC1 on 02/08/2022 - 11:04

    What is your gross and net incomes? The net needs to be below $90,000 for singles.

    • avoidfullprice on 02/08/2022 - 18:52

      You are thinking levy surcharge, not the levy itself OP is asking

      • AndyC1 on 02/08/2022 - 19:23

        Are you sure as OP has gone AWAL and not responding to any of the posts….

  • wei13 on 02/08/2022 - 16:18

    Tax rates and medicare levy rates are quite clear and transparent.

    Either you pay it upfront by PAYG witholding from your employer, or pay it at tax lodgement time. The end result is the same.

    If you don't want to deal with HR, or you can make your own voluntary payments to the ATO throughout the year.

  • Vote for Pedro on 02/08/2022 - 20:00
    +1

    Welcome to OzTax, how may we service you?

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