The Medicare Levy details set on an employee profile are used to determine the correct tax treatment code for each employee.
Medicare Levy Surcharge, Medicare Levy Exemption, and Medicare Levy Reduction details can be recorded for an employee when:
A TFN Declaration has been submitted, in either paper or electronic form
- The employee’s tax table is set as one of the four Medicare levy tax tables:
- Full Medicare Exemption
- Full Medicare Exemption + STSL
- Half Medicare Exemption
- Half Medicare Exemption + STSL
You will need to request this information from your employees and then update the Tax & Super tab in their user profile.
When provided, the Medicare Levy details assigned to an employee will be reported as part of the tax treatment code in pay events submitted through STP Phase 2. They are also used to calculate the correct tax amounts that should apply to the employee.
Note: If the Medicare levy tax tables need to be assigned to an employee but do not appear for selection, you will first need to enable them in Config > Payroll > Tax Tables.
Configure Medicare Levy Details
To set the Medicare Levy details for an employee:
- Go to Users > Employees > select employee > Tax & Super.
- Select the Medicare Level Surcharge tier that applies to the employee. If no surcharge applies, select --None--.
- Select the Medicare Level Exemption that applies to the employee: Half or Full. If the employee has not claimed an exemption, set this as --None--.
- Select the Medicare Level Reduction if this applies to the employee. Select --None-- if no reduction has been claimed.
- Click Save.
Changes that are made to Medicare levy fields will be recorded in the User Updates report.
Depending on the settings you select, you'll only see specific options in the Medicare Levy dropdown fields.
- When a Medicare Levy Surcharge is selected, both the Medicare Levy Exemption and Medicare Levy Reduction fields will be read-only.
- If a Medicare Levy Exemption is set for an employee:
to Full, both the Medicare Levy Surcharge and Medicare Levy Reduction fields will be read-only. Employees claiming a full exemption cannot also claim a reduction, and do not qualify for a surcharge.
to Half, the Medicare Levy Surcharge field will be read-only, as employees claiming a half exemption may still be eligible for a further reduction.
- If a Medicare Levy Reduction is set on an employee first, then:
The Medicare Levy Surcharge will be read-only; and,
The Medicare Levy Exemption will only display ‘None’ and ‘Half’. The option to set a Full exemption will be removed.
Validate Medicare Levy Details
When the Medicare Levy Exemption field is set to Half or Full, the system will validate this against the tax table that has been set to ensure that they align:
- If the Medicare Levy Exemption is ‘Full’, the tax table should be set to either Full Medicare Exemption or Full Medicare Exemption + STSL
- If the Medicare Levy Exemption is ‘Half’, the tax table should be either Half Medicare Exemption or Half Medicare Exemption + STSL.
If another tax table is assigned that doesn’t match the exemption that has been set, you’ll receive a warning message on-screen to review the assigned tax table.
The system will also automatically check that the correct Medicare Levy Exemption is set if any of the following tax tables are assigned:
- Full Medicare Exemption or Full Medicare Exemption + STSL - Medicare Levy Exemption is set as Full
- Half Medicare Exemption or Half Medicare Exemption + STSL - Medicare Levy Exemption is set as Half.