Minimising Medicare Levy Surcharge

john71 on 12/03/2020 - 12:33

Hi

My employer has been underpaying us for years. He's now going to cough up a pile of back-pay. While this is fantastic news, it will push my annual income to roughly $220K for this financial year. (It'll go back to its usual $100K next year.)

I'm in my forties, with kids and a non-working wife, and don't have private health cover. I'm now thinking I'd be better off going private, if only to reduce the Medicare levy surcharge and perhaps cover my kids' likely need for orthodontics.

Is it worth trying to get health insurers to back-date our enrolment to the start of the financial year - ie July 2019? Will any of them do that as a way of winning customers? The financial year is almost over and I suspect I'm going to get slugged pretty hard unless it's possible to claim private health cover for as long as possible.

Many thanks for all your suggestions.

Financial

Comments

  • [Deactivated] on 12/03/2020 - 12:44

    You wont have it for enough days this financial year to be fully exempt.
    Ato website provides guidance.

  • CLoSeR on 12/03/2020 - 12:44
    +3

    I think it's too late to avoid, good luck getting insurers to commit fraud. Think of all the money you've saved on Private Health Insurance.

  • trex on 12/03/2020 - 13:03
    +12

    Is it possible to ask your employer to pay you the backpay only in July 2020?

    • spiff on 12/03/2020 - 13:16
      +2

      This is the only solution.

  • Typical16-bitEnjoyer on 12/03/2020 - 13:04
    +6

    How were they underpaying you? Did they breach an award/eba/contract? You might have options to amend previous tax returns - perhaps speak to an accountant?

  • tsunamisurfer on 12/03/2020 - 13:26
    +6

    Wouldn't the employer be required to amend their records for prior years so you can amend your tax returns for prior years?

    Pushing someone in the middle tax bracket to the top tax bracket to the tune of $40k is a huge expense.

    OP….if you are normally in the $100k bracket and now in the top bracket MLS is the LEAST of your concerns.

  • wiipantz on 12/03/2020 - 13:44

    100k and you didn't have it? Probs time to get it?

    • sw00p on 12/03/2020 - 14:31

      Not if their partner doesn't work it's not.

      • wiipantz on 12/03/2020 - 14:56

        yeah fair. need more info, please send total income: credit card numbers and security codes OP :)

    • netjock on 12/03/2020 - 17:11

      Married couples need to be over $180k combined income to pay MLS.

  • holdenmg on 12/03/2020 - 13:47

    You can send me non-sequential notes in an Aldi Bag if it will help your situation… lol

  • jimdotpud on 12/03/2020 - 14:10
    +6

    your employer should be making this as painless for employees as possible.

    ATO - back payments
    see Method B(ii)

    ATO-supplementary
    item 24 - lump sum arrears

    example
    you need to discuss this with your employer and they should be sorting this out appropriately with the ATO (eg possible tax offsets depending on the tax years in question)

    your PAYG needs to show this as a separate payment (item 24 - Label E), if they include it in your gross, you are screwed

  • john71 on 13/03/2020 - 09:12

    Great advice all round. Thanks so much to everyone who took the time to respond.

    The under-payment was a supposedly inadvertent EBA breach concerning the treatment of overtime. I'm not the only one affected. We're trying to get payroll to address this the right way rather than just dumping all the cash in our bank accounts as a regular PAYG transaction.

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