Earning over $90K? There’s an easy way to cut your tax bill
High earners without hospital insurance are paying more tax than they need to.
The start of tax season is just a couple of weeks away and many Aussies are already looking for ways to reduce their bill. For the high earners out there, avoiding the Medicare levy surcharge is an easy way to do it.
Unfortunately, it seems thousands of tax-payers aren't sure how the surcharge works. In fact, a Finder survey found that 39% of Aussies don't understand the Medicare levy surcharge at all.
If you're among them, here's a quick recap: The surcharge applies a tax of between 1% and 1.5% to anyone earning over $90,000. According to 2016 figures, that's well over 2 million people in Australia.
However, the tax is only applied to those high earners who don't have hospital cover. Get private hospital insurance, and the tax is scrapped. It's that easy.
Here's the kicker though. The price of hospital cover is often cheaper than the surcharge itself. So even if you don't want health insurance, you save money by having it.
To demonstrate, Finder averaged the cost of three basic hospital policies from three different insurers, to get a sample cost of $813 a year. That's significantly less than many people will be paying in taxes.
|Income||Annual MLS cost||Sample hospital cover cost||Potential saving|
Strangely, it's a tip that only some Aussies are making use of. According to another Finder survey, only one in 10 people with hospital insurance bought cover to avoid the Medicare levy surcharge.
If you're one of the higher earners out there, you should definitely consider joining them.
Get hospital cover and avoid the surcharge