Australian Expat Medicare Responsibilities
When an Australian expat is moving overseas it can be very exciting and unnerving time. Common things going through your head will be; fitting into your new workplace, getting settled in your new accommodation, where are you going to grocery shop, what restaurants are around, will I join a gym or just wing it as I go. Before clients go overseas we pass on our pre-departure checklist to make sure they have done the necessary ‘Life Admin’ and they aren’t caught with any nasty surprises in the future. We make sure they are ready to face those cross-jurisdictional issues they may encounter when it comes to different tax legislation and financial issues.
When you’re expatriating, you will need to make up your decision on what you are going to declare as your tax residency status whether to be non-resident or to remain a resident. Something like this will need to be decided quite quickly and the ATO does need to be informed. You will need to consider key things, like how long is your assignment overseas for? Could you be moving onto another country after this, so on and so forth. There are three key tests the ATO uses, they are the Domicile test, the 183-day test and the superannuation test. These can be found here and are a useful tool to use.
If you remain a tax resident but are an Australian expat, you will still be liable for the Medicare levy and depending on your income, the Medicare levy surcharge(MLS). The Medicare levy is currently 2% on taxable income and if you’re single and your taxable income is $90,000 or greater you will be paying some percentage of levy surcharge. The MLS is tiered upward with regards to income levels, but it will range from 1% upward to 1.5%. As an example, a single Australian expat individual, whose taxable income after deductions is $150,000, will pay $3,000 in Medicare levy as well as $2,250 in MLS. An Australian expat who is on the same level of pay but classed as a non-resident, is not required to pay the Medicare levy or surcharge nor pay tax on that foreign sourced employment. However, they will need to report this income for HELP/HECS repayment purposes.
Non-resident Australian expats won’t be eligible for Medicare benefits if they have been overseas for a period greater than 5 years or more. It is important that you have adequate internal health insurance in place in case anything happens to you. We recommend to our clients that they seek health insurance from a reputable provider and it is always recommended you do some thorough research to know what your covered for.