From 1 July 2010, the government will introduce three new “Private Health Insurance Tiers” in respect of the Private Health Insurance Rebate as follows.

For those individuals and families who do not take out private health insurance, the medicare levy surcharge increases from 1% to 1.5%

All income thresholds will continue to remain indexed. For low and middle-income earners, the existing 30%, 35%, 40% Private Health Insurance rebates will remain in place.

From 1 July 2009, the income definition for Medicare Levy Surcharge Purposes will change to include your taxable income plus reportable fringe benefits plus salary sacrifice and personal deductible contribution plus net investment losses less the first $145,000 of taxed super lump sums for those aged 55 to 59. In other words, high income earners won't be able to salary sacrifice their way into the rebate or out of Medicare Levy Surcharge.

Please contact us in relation to review your salary sacrifice arrangements and the tax effect of this.