If you’ve ever looked closely at your Australian tax return, you’ve probably seen something called the Medicare Levy pop up. It’s usually around 2% of your taxable income - and it helps fund our public healthcare system, Medicare.
Most people have to pay it. But did you know that in some, very specific, cases you might actually be exempt from paying the Medicare Levy? That’s right - depending on your situation, you could save yourself a decent chunk of change at tax time. 🙌
Let’s break down who qualifies for an exemption, how it all works, and what you need to do to claim it.
First Things First: What Is the Medicare Levy?
The Medicare Levy is not the same as paying for private health insurance. It’s a separate charge that most working Australians pay through their taxes to help keep Medicare running.
Usually, if you earn above a certain income threshold, the levy automatically kicks in when you lodge your tax return. But some people don't have to pay it - either at all or for parts of the year.
Why It's Important to Tell Your Tax Agent About Your Visa Status
One thing a lot of people don't realise is that your tax agent won't automatically know your visa situation - and they’re not allowed to just assume it, either.
Unless you tell them that you’re on a temporary visa or you might not be eligible for Medicare, they might miss the chance to help you claim an exemption.
Being upfront about your visa status means your tax agent can check if you might qualify for the Medicare Levy Exemption and guide you through applying for a Medicare Entitlement Statement (MES) if needed.
A quick conversation could save you hundreds (sometimes thousands!) of dollars at tax time; so it’s absolutely worth mentioning, even if you’re not sure whether it matters. 🌟
Who Might Be Eligible for a Medicare Levy Exemption?
You may be able to get a full or partial exemption if:
1. You’re Not Eligible for Medicare
If you’re living and working in Australia but aren’t entitled to Medicare (like some temporary visa holders), you could be fully exempt.
💡Tip: Even if you’ve got private health cover, if you're not eligible for Medicare, you can still apply for the exemption.
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2. You Have a Low Income
If your taxable income is below the Medicare Levy low-income thresholds, you might either not pay the levy at all or only pay part of it.
For 2023–24, the low-income thresholds were:
Singles: $26,000
Seniors and Pensioners: $51,361
Families: $43,846 (or $57,198 if you are entitled to the seniors and pensioners tax offset) plus $4,027 for each dependent child.
ℹ️(These figures change a little every year, so always double-check)
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3. You Hold a Medicare Entitlement Statement (MES)
If you’re not eligible for Medicare, you’ll need a Medicare Entitlement Statement (often called an MES) from Services Australia to prove it to the ATO.
This official document says you didn’t have Medicare access for a certain period (or at all) during the financial year.
No MES = No exemption.
When Can You Apply for a Medicare Entitlement Statement (MES)?
If you need a Medicare Entitlement Statement (MES), you’ll need to wait until after June 30 of the financial year you want it to cover before you can apply. That’s because June 30 marks the end of the Australian financial year, and Services Australia needs the whole year wrapped up before they can properly assess whether you were eligible for Medicare (or not).
You can’t apply early, even if you know you won’t be eligible, because they have to look at the full 12 months before making a decision.
Hot tip: It’s best to apply as soon as possible once the financial year ends! MES processing times can take up to 8 weeks, and it gets super busy between July and November when lots of people are applying. The earlier you get started, the better your chances of having your paperwork sorted in time for your tax return.
If you’re not sure where to start or have questions about your eligibility, Services Australia can help - or you can have a chat with your tax agent to point you in the right direction. 👍
How to Apply for a Medicare Levy Exemption
If you think you’re eligible, here’s what to do:
Step 1: Check Your Medicare Status
Ask yourself:
Am I a temporary visa holder without Medicare access?
Do I already have an MES?
Was I covered under a reciprocal healthcare agreement with another country?
If you’re unsure, Services Australia can help confirm your situation.
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Step 2: Apply for a Medicare Entitlement Statement (if needed)
If you’re not eligible for Medicare, you’ll need to apply for an MES before you can claim the exemption.
How to get it:
Apply online via your Centrelink/Services Australia account linked to myGov.
Or, if you prefer paper forms, you can apply manually (it's just a little slower).
ℹ️Heads up: MES applications can take a few weeks, so it’s good to get in early!
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Step 3: Complete Your Tax Return
When you lodge your tax return:
Tick the box that says you are claiming a Medicare Levy Exemption.
Declare the number of days or the period you were eligible.
Attach or reference your MES if the ATO requests it.
If you’re using a tax agent, they’ll need a copy of your MES before they can apply the exemption to your tax return. If you’re lodging your return yourself through myTax, there are step-by-step prompts to help guide you through the process.
ℹ️Just a heads-up - if you claim the exemption on your return before you’ve actually received your MES, the ATO will likely remove it, and you’ll need to lodge an amendment later to have it applied once your certificate comes through.
A Few Quick Tips
Partial Year Exemptions: If you only became ineligible for Medicare partway through the year (or vice versa), you might only get a partial exemption.
Exemption ≠ Refund: Getting an exemption doesn’t mean the ATO will pay you anything extra - it just means you won’t have to pay the Medicare Levy you would’ve otherwise owed.
Don’t Skip It: If you’re eligible, it’s 100% worth claiming. Every dollar counts!
Don’t Miss Out on Your Exemption
The Medicare Levy Exemption isn’t something everyone can claim, but if you’re eligible, it’s a pretty sweet tax saving! 🍰
The key is knowing your Medicare status, getting your MES sorted if you need one, and making sure your tax return reflects it properly.
And remember: your tax agent won’t automatically know your visa situation unless you tell them. Being open about your visa or Medicare eligibility means they can help point you in the right direction and make sure you don’t miss out on any savings you’re entitled to. 💬