The Federal Treasurer issued a Press Release on 1 May 2013 indicating that the Government proposes to increase the Medicare levy by half a percentage point from 1 July 2014.
From 1 July 2014, the Medicare levy will rise from 1.5% to 2% of taxable income.
A table summarizing the annual impact is below:
| Taxable Income | Additional Medicare Levy Payable |
| $75 000 | $375 |
| $90 000 | $450 |
| $100 000 | $500 |
| $125 000 | $625 |
| $150 000 | $750 |
| $180 000 | $900 |
DisabilityCare Australia Fund
The Government is proposing to establish a special DisabilityCare Australia Fund. It is intended that the Revenue from the additional levy will be paid into the fund, which will only be drawn down to meet expenditure directly related to DisabilityCare.
Impact on 457 visa holders
The Australian Government has signed Reciprocal Health Care Agreements (RHCA) with the United Kingdom, the Republic of Ireland, New Zealand, Sweden, the Netherlands, Finland, Belgium, Norway, Slovenia, Malta and Italy and these individuals are subject to the Medicare levy.
Therefore 457 visa holders coming from these countries will potentially become subject to the increased Medicare levy. However, it is doubtful whether these individuals will be able to access the DisabilityCare Australia Fund as historically the Federal Government has restricted access to individuals who are either an Australian citizen or the holder of a permanent resident visa or the holder of a special-category visa.
Individuals coming from non reciprocal health care countries are not subject to the Medicare levy and the proposed increase will not apply to these individuals. Please note, the individual needs to apply for the Medicare Levy exemption annually.
Impact on Expatriates
Many employers impose a 'hypothetical tax' when their Australian employees are sent overseas i.e. an amount that equates to the tax that would have been paid had the employee remained at home in Australia.
A key question to be resolved is whether the additional Medicare levy should be incorporated into the calculation of the Australian hypothetical tax withholding. Similar levies have been imposed in the past (i.e. East Timor funding and the Gun buyback scheme).
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