When a full exemption may apply
A full exemption may apply for qualifying days if you have no dependants, or if each dependant is also in an exemption category or has to pay the Medicare levy.
Watch — Medicare levy exemption
ADF Medicare Levy Exemption — Are You Eligible?
Defence medical care is the starting point, but your partner, dependent children and qualifying dates can determine whether a full or half exemption applies.
What this video covers
- The Defence medical-entitlement condition for Category 1
- When a member with no dependants may qualify for a full exemption
- How a partner or dependent child can change the result to a half exemption
- Why the Medicare levy surcharge is a separate calculation
Full and half exemptions are different
The exemption is worked out for qualifying days, and family circumstances during those days matter.
When a half exemption may apply
A half exemption may apply if you have a dependant who is not exempt and does not have to pay the levy, including some low-income partner or dependent-child situations.
Information needed for the calculation
Changes during the year can split the calculation into different periods, so provide dates rather than only your year-end position.
Medical-entitlement dates
Confirm the days you were entitled to full free medical treatment for all conditions under Defence Force arrangements.
Partner details
Provide your partner’s income and levy position so the full or half exemption can be assessed for the relevant period.
Dependent children
Identify dependent children, shared care and whether another parent is also claiming an exemption. A family agreement may be relevant when both partners qualify.
Life changes during the year
Joining or leaving Defence, starting or ending a relationship, or having a child can change the number of full-exemption and half-exemption days.
Common questions about the ADF Medicare levy exemption
Does Defence medical care automatically remove the Medicare levy?
Not in every case. Entitlement to full free medical treatment for all conditions is the starting condition, but dependants and the relevant dates help determine whether a full exemption, half exemption or no exemption applies.
Can an ADF member with a partner receive a full exemption?
Potentially. A full exemption can apply where the partner is also exempt or has to pay the Medicare levy. If a dependent partner is not exempt and does not have to pay the levy, only a half exemption may apply.
Is the Medicare levy surcharge included in this exemption?
No. The Medicare levy surcharge is a separate calculation. Family income, private hospital cover and other circumstances may need a separate review.
Video transcript
The supplied transcript has been lightly edited for punctuation, clarity, names and Australian spelling.
Defence provides your medical care, so why might a Medicare levy still appear on your tax return? For ADF members, the answer can depend on your partner, your children and the dates you were entitled to Defence health care.
The starting point is your entitlement to full free medical treatment for all conditions under Defence Force arrangements. That can qualify you for a medical exemption from the Medicare levy. Whether the exemption is full or half depends on your circumstances during the relevant period.
First, suppose you are single with no dependants. If you meet the Defence medical-entitlement condition, you can generally claim a full exemption for your qualifying days. But single does not necessarily mean no dependants. If you are a single parent, the rules for dependent children still need to be considered.
Now suppose you have a partner and no children. If your partner has to pay the Medicare levy, you can generally receive a full exemption for your qualifying period. If your partner is your dependant, is not in an exemption category and does not have to pay the levy—for example because their income is too low—you may qualify for only a half exemption. That is why your accountant needs your partner’s income and tax details.
Having children does not automatically mean you lose the full exemption. If you are a single parent with a dependent child who is not exempt, a half exemption will generally apply instead. If both partners qualify for the Defence medical exemption but share a dependent child who is not exempt, they can complete a family agreement so one partner claims a full exemption and the other claims a half exemption.
A half exemption means half the Medicare levy is waived for the relevant period. It does not mean half your income tax is removed, and the Medicare levy surcharge is a separate calculation. Your family circumstances and hospital cover may need a separate review.
Provide your Defence medical-entitlement dates, your partner’s income details and information about your dependent children. Tell us if you joined or left Defence, started or ended a relationship, or had a child during the year. These changes can affect how many days qualify for each exemption.
Your Defence health-care entitlement is the starting point. Your family circumstances help determine the exemption you can claim. At DefenceTax, we can check the details with you. Book with Garry Angus at defencetax.com.au or call 0418 327 096.
General information only. Tax treatment depends on the applicable law, relevant dates, supporting records and your individual circumstances.