Table of Contents

STP Phase 2 - Medicare Levy Reduction (No. of Dependants) in Reckon Accounts 2023

ATO Requirements

The Medicare Levy Reduction (MLR) helps reduce the Medicare Levy an employee has to pay if eligible based on family taxable income below a certain threshold, and consideration of the number of dependants. Claiming this variation may also absolve the payee from repayment of Study and Training Support Loans (STSL) that would otherwise be payable, for the period of reduction.

This is another component used for generating the Tax Treatment Code — Character 6.

The MLR Tiers are:

  1. No reduction
  2. Spouse only
  3. Number of Dependants:
    1. 1 to 9
    2. 10 or more


The MLR is only permissible to Regular employees and Seniors/Pensioners – except for singles. The MLR is not permissible for:

  1. Actors
  2. Horticulture and Shearers
  3. Working Holiday Makers
  4. Seasonal Worker Programme
  5. Foreign Resident
  6. No TFN
  7. ATO-Defined
  8. Voluntary Agreement
See Medicare levy reduction | Australian Taxation Office (ato.gov.au) for more information.


Reckon Accounts implementation

The following Medicare Levy option is available for those claiming a Reduction.

Do not select anything if you do not need to claim. To check if you qualify, check with your health care provider, your accountant, or with the ATO.

New field for the MLR

A new Medicare Levy Reduction (No. of Dependants) dropdown is available within the employee records in Reckon Accounts 2023 by going to the Payroll and Compensation Info > Taxes window. This field is only applicable for the following categories:

INCOME TYPE

STP TAX CATEGORY

TAX CODE

  1. SAW – Salary and Wages
  2. CHP – Closely Held Payees

—

  1. 2-TFT
  2. 6-HalfML
  3. 8-No TaxC
  1. SAW – Salary and Wages
  2. CHP – Closely Held Payees
  1. Seniors/Pensioners – Single
  2. Seniors/Pensioners – Member of a couple
  3. Seniors/Pensioners – Illness separated
  1. 6-HalfML
  2. 8-No TaxC

The available values and corresponding codes:

VALUES

CODE

Blank – No reduction

“X”

Spouse only

“0”

1

“1”

2

“2”

3

“3”

4

“4”

5

“5”

6

“6”

7

“7”

8

“8”

9

“9”

10+

“A”


Medicare Levy rules

  • When a Medicare Levy Surcharge is applied an employee does not qualify for the exemption and reduction.
  • When a Full Medicare Levy Exemption is applied an employee does not qualify for the surcharge and reduction.
  • If Half Medicare Levy Exemption is applied an employee cannot apply the surcharge, however a reduction will be available if they meet the criteria.
  • When a Medicare Levy Reduction is applied and employee does not qualify for the surcharge, however a half exemption will be available.
  • A Single Senior or Pensioner cannot apply for Medicare Levy Reduction as they have no Spouse.


Company file post-upgrade

No Medicare Levy Reduction would be assigned to any new or existing Employees after the Company File was upgraded.


Updating records

There are two ways to assign the Medicare Levy Reduction on the employee record:

  1. Manually – by editing each employee record.
  2. Migration Assistant – use the utility for STP Phase 2 Setup under the Employees menu.


IIF Files

The STP Tax Category was added to the IIF file with the header name: DEPENDANTS.


Need more help?

Ask the Reckon Community at: https://community.reckon.com/

Or Log a Support Ticket: https://www.reckon.com/au/support/

How did we do?

STP Phase 2 - Medicare Levy Surcharge in Reckon Accounts 2023

STP Phase 2 - How Tax Treatment Code is designated in Reckon Accounts 2023

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STP Phase 2 - Medicare Levy Surcharge in Reckon Accounts 2023
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STP Phase 2 - STP Tax Category in Reckon Accounts 2023
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