Table of Contents

STP Phase 2 - Medicare Levy Surcharge in Reckon Accounts 2023

ATO Requirements

The Medicare Levy Surcharge (MLS) is an additional payment on top of the Medicare Levy imposed on those who do not have an appropriate level of private patient hospital cover and earn above a certain income. The rates are dependent upon domestic circumstances (single/family) and combined family income thresholds.

A payee who qualifies for the MLS is ineligible for Medicare Levy Exemption (MLE) or Medicare Levy Reduction (MLR).

This is another component used for generating the Tax Treatment Code — Character 4.

The MLS Tiers are:

  1. 0.00%
  2. 1.00%
  3. 1.25%
  4. 1.50%


The MLS is only permissible for Regular employees and Seniors/Pensioners employees. The MLS is not permissible for:

  1. Actors
  2. Horticulture and Shearers
  3. Working Holiday Makers
  4. Seasonal Worker Programme
  5. Foreign Resident
  6. No TFN
  7. ATO-Defined
  8. Voluntary Agreement (V)
See Medicare levy surcharge income, thresholds and rates | Australian Taxation Office (ato.gov.au) for more information.


Reckon Accounts implementation

The following Medicare Levy options are available for those claiming a Surcharge or Reduction.

Do not select anything if you do not need to claim. To check if you qualify, check with your health care provider, your accountant, or with the ATO.

New field for the MLS

A new Medicare Levy Surcharge dropdown is available within the employee records in Reckon Accounts 2023 by going to the Payroll and Compensation Info > Taxes window.

This field is only applicable for the following categories:

INCOME TYPE

STP TAX CATEGORY

TAX CODE

  1. SAW – Salary and Wages
  2. CHP – Closely Held Payees

—

  1. 1-NoTFT
  2. 2-TFT
  3. 8-No TaxC
  1. SAW – Salary and Wages
  2. CHP – Closely Held Payees
  1. Seniors/Pensioners – Single
  2. Seniors/Pensioners – Member of a couple
  3. Seniors/Pensioners – Illness separated

8-No TaxC

The available values and corresponding codes:

VALUES

CODE

Blank – 0.00%

“X”

1.00%

“1”

1.25%

“2”

1.50%

“3”


Medicare Levy Rules

  • When a Medicare Levy Surcharge is applied, the employee does not qualify for the exemptions and reduction.
  • When a Full Medicare Levy Exemption is applied, an employee does not qualify for the surcharge and reduction.
  • If Half Medicare Levy Exemption is applied an employee cannot apply the surcharge, however a reduction will be available if they meet the criteria.
  • When a Medicare Levy Reduction is applied, an employee does not qualify for the surcharge, however half exemption will be available.
  • A Single Senior or Pensioner cannot apply for a Medicare Levy Reduction as they have no Spouse.


Company file post-upgrade

No Medicare Levy Surcharge will be assigned to any new or existing Employees after the Company File was upgraded.


Updating records

There are two ways to assign the Medicare Levy Surcharge on the employee record:

  1. Manually – by editing each employee record.
  2. Migration Assistant – use the utility for STP Phase 2 Setup under the Employees menu.


IIF Files

The STP Tax Category was added to the IIF file with the header name: MLVARIATION.


How did we do?

STP Phase 2 - STP Tax Category in Reckon Accounts 2023

STP Phase 2 - Medicare Levy Reduction (No. of Dependants) in Reckon Accounts 2023

Related Articles

Single Touch Payroll Phase 2 Overview
How to prepare for Single Touch Payroll Phase 2 - Reckon Web
STP Phase 2 - Medicare Levy Reduction (No. of Dependants) in Reckon Accounts 2023
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