What is the Medicare levy and do working holiday makers pay it?

What is the Medicare Levy?

The Medicare Levy is a 2% tax on taxable income:

• Applied to the taxable income of Australian residents
• Collected alongside income tax
• Appears as a separate line on your tax assessment
• Helps fund the Medicare healthcare system

For Australian residents, the levy is automatic. For working holiday makers, the position depends on whether you are eligible for Medicare.

Do working holiday makers pay the Medicare Levy?

Most working holiday makers are exempt:

• If you are not eligible for Medicare, you can claim a full exemption (no levy paid)
• If you are partially eligible (RHCA enrolment for part of the year), you may claim a partial exemption
• If you are fully eligible (rare for working holiday makers), you pay the full 2%

Most working holiday makers fall into the first category and pay no Medicare Levy at all.

How much does the exemption save you?

The 2% exemption is meaningful at typical working holiday maker income levels:

• Annual earnings of $15,000 → save $300
• Annual earnings of $25,000 → save $500
• Annual earnings of $35,000 → save $700
• Annual earnings of $45,000 → save $900

This is money that goes into your refund instead of into general revenue. If you have lodged a previous return without claiming the exemption, our team can amend it to recover the levy paid.

How does the Medicare Levy exemption get claimed?

The exemption requires:

1. A Medicare Levy Exemption Certificate (in most cases)
2. Correct completion of the Medicare Levy section of your return
3. Evidence supporting your non-Medicare eligibility (passport, visa)

Our team handles all of this when we prepare your return. We obtain the Medicare Levy Exemption Certificate on your behalf where required.

What if your country has an RHCA with Australia?

The position is more nuanced for citizens of the 11 RHCA countries (UK, Ireland, New Zealand, Sweden, Netherlands, Finland, Norway, Belgium, Slovenia, Malta, Italy):

• If you enrolled in Medicare under your RHCA, you may not be fully exempt
• Partial exemption may apply depending on enrolment dates
• Full exemption may still apply if you did not enrol
• The rules depend on your specific circumstances

We work out the correct treatment for your situation when preparing your tax return. Get in touch with our team if you are unsure about your specific position.

What if you have already lodged without claiming the exemption?

If you lodged a previous return and paid the Medicare Levy when you should have been exempt:

1. The amount can usually be recovered through an amendment
2. Amendments can typically be made for up to two years after the original lodgment
3. Our team handles amendments for working holiday makers

Send us your previous returns and we will check whether you are owed a refund of the Medicare Levy paid.