The new financial year starting on July 1st, 2012 will, as usual, bring with it changes to tax legislation.
One of these changes which could affect you is the introduction of means testing on the Private Health Insurance rebate.
At present the rebate is a straight 30% across the board, but from the 2012-13 financial year there will be a sliding scale based on age, marital status and income levels.
Basically, if you are a single person earning over $84,000 pa or a family with an annual income over $168,000 pa, you will be facing a reduction in your rebate.
Above these base income levels there are 3 tiers, with the highest tier ($130,001 pa and above for singles, $260,001 pa and above for families) seeing a complete abolition of the rebate.
Obviously, this change can make a big dent in your finances, so what can you do?
Well, there is still some confusion over how this new system will work with Medicare and the ATO not yet having firm procedures in place.
What IS certain is that several private health insurers are offering their clients the option of getting the whole 30% reduction by prepaying their 2012-13 premiums before the end of the financial year on 30th June.
Obviously, this is not a strategy that is suitable for everybody so, if you think you will be affected by this change, phone your Wealthwise financial adviser on (08) 9380 6333 or get in touch via the Contact Us form on the website. Alternatively, talk to your existing private health insurance provider.
Tomorrow we will look at a case study to see how this means testing could affect you.
The information in this article is of a general nature only and has been prepared without taking into account your particular financial needs, circumstances and objectives. It should not be construed as financial, taxation or legal advice.
Before acting on the basis of this information, you should consider its appropriateness to your own objectives, financial situation and needs. You should also obtain and read a copy of the relevant Product Disclosure Statement before making any decision to acquire a financial product.