Completing the Private Health Insurance labels
This support note applies to:
- AO Tax (AU)
- AE Tax Series 6 & 8 (AU)
- AE Tax (AU)
Legislation contained in the Private Health Insurance Legislation Amendment Bill 2014 (the Bill) introduces changes to the calculation of the private health insurance rebate (PHIR) which take effect from 1 July 2013.
On 1 April each year (commencing 1 April 2014), a single rebate adjustment factor will be applied to all insurance products. This adjusts the rebate percentage received by individuals. This Knowledge Base article will assist with reconciling the information you receive from the taxpayer and where this information should appear in the PHI area of the 2014 onwards income tax return.
The following areas provides information on the Private Health Insurance changes:
Examples for completing PHIR
The following examples will help illustrate the steps needed to complete the PHI details in MYOB Tax.
In this example we will assume that the following information about this taxpayer is contained in the Private Health Insurer's Annual Statement:
- Individual is 40 years of age.
- Individual is single with no dependants.
- Income for PHI rebate purposes is $86,000.
- Individual did not claim any premium reductions during the year.
- Individual did not pay any Lifetime Health Cover (LHC) loading.
The taxpayer paid premiums of:
- $900 for Period 1 July 2013 to 31 March 2014 (period 1 = 9 months).
- $315 for Period 2 April 2014 to 30 June 2014 (period 2 = 3 months).
You will now be stepped through entering this information into the PHI area of MYOB Tax.
Perform the following instructions from within the individual tax return:
- Click the Medicare tab. The contents of the Medicare tab displays.
- At Item H at the prompt Enter private health insurance details type Y and press Enter. The Private Health Insurance Policy Details (PHI) worksheet opens.
Enter the following amounts at the applicable labels from the information provided in the example above:
Period
Label J
Label K
Label L
1
900
0
30
2
315
0
31
The above image displays a 2014 Tax Return worksheet. For future years, only the period dates will change.- Press F6 to save and close the PHI worksheet. The tax return appears.
MYOB Tax Calculation
MYOB estimate will calculate Private Health Insurance Offset or the Excess Private Health Insurance reduction according to the ATO guidelines.
In this example we assume that the following information is contained in the Private Health Insurers Annual Statement.
Here the taxpayer is married and may only claim for the spouse if they both had equal rights and benefits in the health fund policy. This means that apart from the Tax Claim Code, the taxpayer and the spouse's entries are identical in every respect.
In this example, the taxpayer and the spouse:
- Aged between 65 and 69 years of age,
- They are married with no dependants and
- They have a combined adjusted taxable income for PHI rebate purposes of $198,500.
The taxpayer did not:
- Claim any premium reductions during the year and
- Did not pay any Lifetime Health Care (LHC) loading.
The taxpayer paid premiums of:
- $1,320 for Period 1 July 201X to 31 March 201Y (period 1 = 9 months).
- $400 for Period 2 April 201X to 30 June 201Y (period 2 = 3 months).
- Click the Medicare tab. The contents of the Medicare tab appears.
- At Item H at the prompt Enter private health insurance details type Y and press Enter. The Private Health Insurance Policy Details (PHI) worksheet opens.
Enter the following amounts at the applicable labels from the information provided in the example above:
Period
Label J
Label K
Label L
1
1320
0
35
2
400
0
36
IMPORTANT: When entering the premiums paid you will need to enter exactly what appears in the Private Health Insurer's Annual Statement. If you have any queries on what values to enter into the tax return, you will need to contact the Private Health Insurer directly.
- Click the ellipses [...] button at the Tax claim code field and select code C.
Note: For partnered taxpayers, the taxpayer's tax claim code is 'C'. This is irrespective of whether the spouse died during the year. Where the taxpayer is claiming the PHIR for their spouse in their return, the code for the spouse's entry is 'D'.
- Click the ellipses [...] button and at the question 'Are you claiming for your spouse and have you received your spouse's permission?' type Y. A set of details identical to those entered for the taxpayer appears in the spouse fields and the Tax Claim code is correctly set to 'D'.
Press F6 to save and close the PHI worksheet. The tax return appears.
MYOB Tax CalculationMYOB estimate will calculate Private Health Insurance Offset or the Excess Private Health Insurance reduction according to the ATO guidelines.
What if the spouse has a slightly different PHI claim to the taxpayer?
If the taxpayer and spouse claims are not identical in every respect for both periods, then the spouse is to complete a separate set of entries, for each relevant period or periods, in their tax return.
There are circumstances where a taxpayer has three periods of data to input. An example of this is where the taxpayer has not changed their insurer but has changed into a different benefit code during the tax year (due to a change in their age). In this case you will find that the taxpayer will have PHI data for 3 periods.
In this example the taxpayer has two entries for Period 1 and only one entry for Period 2. This is because the taxpayer had changed into the next Benefit Code as they had their 70th birthday on 1 December 201X.
This is entered into MYOB Tax by creating two PHI worksheets.