(AUSTRALIA) — Temporary visa holders and foreign residents can claim a Medicare levy exemption in Australia when they were not eligible for Medicare, but the exemption must be recorded correctly in the tax return and supported by the required documents.

The Medicare levy generally equals 2% of taxable income and is paid on top of income tax.

The amount can fall when taxable income is below the relevant threshold, and some taxpayers do not have to pay it.

Foreign residents temporarily working in Australia, people who lack Medicare eligibility and some others may qualify for a full or part-year exemption.

The outcome depends on tax residency, Medicare eligibility, visa position and the period spent in Australia.

The issue can affect temporary visa holders with Australian wages, rental income or other Australian-source income.

Having a tax-return obligation does not automatically mean a person must pay the Medicare levy.

The Australian Taxation Office’s 2026 individual tax-return instructions state that a person who remained a foreign resident for tax purposes for all of 2025–26 can claim a full Medicare levy exemption for 365 days.

The exemption must be claimed in the tax return.

A foreign resident may work in Australia for part of the financial year, have tax withheld from wages and still qualify for the exemption.

Australian income and Medicare levy obligations are separate questions.

People who were not Australian residents for tax purposes during the entire year may qualify for an exemption covering the relevant days.

The calculation can change when a person arrives in Australia, leaves the country or changes tax residency during the year.

Arrival and departure records therefore matter.

Visa documents, passport travel records and tax-residency information can help establish whether the exemption covers the full year or a particular period.

Medicare eligibility creates a separate test.

Services Australia says a person who was not entitled to Medicare benefits for all or part of the year can apply for an exemption through the tax return.

That rule is relevant to some temporary visa holders who live or work in Australia but cannot enrol in Medicare.

It can include short-term workers, temporary skilled workers, international students, bridging visa holders, partner visa applicants and visitors with Australian income.

Visa status does not provide a complete answer.

Eligibility can depend on the visa, the person’s country of origin, reciprocal health-care arrangements and changes later in the visa process.

The principal document for a Medicare levy exemption is the Medicare Entitlement Statement, commonly known as an MES.

Services Australia says the statement shows the period during the financial year when the person was not eligible for Medicare.

A person must obtain the MES before starting the tax return and tell the Australian Taxation Office that they hold it when completing the return.

The statement should also be kept with the person’s tax records.

Applications for an MES should be lodged from 1 July for the previous financial year.

Services Australia allows applications online through myGov and says the online process is faster and easier.

For the 2025–26 income year, applications should generally be made after the financial year ends, from 1 July 2026.

Waiting until the tax-return deadline can create a timing problem if the statement is required before lodging.

A separate MES is required for each income year in which a person claims the exemption.

Someone who remains in Australia across 2025–26 and 2026–27 may need separate statements covering each year.

The exemption should be reviewed year by year.

A person’s Medicare eligibility, tax residency and visa position can change between financial years.

International students face the same distinction.

Some student visa holders are not eligible for Medicare and instead hold Overseas Student Health Cover, or OSHC.

OSHC does not itself establish Medicare eligibility.

A student who was not eligible for Medicare for all or part of the year may need an MES before claiming the exemption through the tax return.

Three issues must be considered separately: visa work rights, income-tax residency and Medicare levy exemption.

A student can have Australian wages and a tax-return obligation while still qualifying for an exemption if the relevant conditions are met and the required statement is obtained.

Temporary skilled workers and employer-sponsored visa holders also need to check their individual position.

Some may qualify for Medicare because of their visa, country of origin or a reciprocal health-care arrangement.

Others may not.

The visa subclass alone does not settle the question.

A skilled worker who was not eligible for Medicare during the relevant period should check whether an MES is required before completing the tax return.

Partner visa applicants and bridging visa holders can see their Medicare position change during the visa process.

A person may become eligible from a particular date, while another person may remain ineligible throughout a period covered by a bridging visa.

Dates can determine whether the exemption applies for the whole year or part of it.

Relevant records include visa grant dates, bridging visa dates, Medicare enrolment dates and the period stated on the MES.

Visitors with Australian-source income also need to consider the levy.

Short-term work income, Australian rental income and other taxable Australian income can create a tax-return obligation.

A visitor who is a foreign resident temporarily working in Australia or who was not eligible for Medicare should check whether an exemption applies.

Filing a tax return does not automatically require payment of the Medicare levy.

Private health insurance is a separate matter.

Temporary visa holders may hold private health cover, overseas visitor health cover or OSHC because of visa requirements or personal protection, but that cover is not the same as Medicare eligibility.

A person claiming an exemption because they could not access Medicare may still need an MES.

Insurance documents can support the person’s records, but they do not replace the statement required for the exemption.

The Medicare levy surcharge is also separate from the Medicare levy.

The surcharge can apply to higher-income taxpayers who do not hold an appropriate level of private hospital insurance.

A taxpayer may therefore need to consider Medicare eligibility, the Medicare levy exemption, private health insurance and the surcharge as separate questions.

Private cover does not by itself remove the need to examine Medicare eligibility.

Records become particularly important when eligibility changes during the year.

Temporary visa holders should retain passport arrival and departure records, visa notices, bridging visa documents, Medicare correspondence, MES documents, private health records, employment income statements and tax-return records.

ATO and Services Australia correspondence can also help establish the relevant period.

The documents should show whether the exemption covers the full financial year or a defined number of days.

Several filing errors recur.

Some temporary visa holders assume they must pay the Medicare levy because an employer withheld tax.

Others assume that foreign-resident status removes the need to claim the exemption properly.

Another error is lodging the tax return before obtaining the MES.

Services Australia says the statement is needed before starting the tax return.

A separate mistake is assuming that one statement covers several financial years.

Part-year changes can also produce incorrect claims.

Someone who becomes eligible for Medicare during the year may qualify for an exemption for an earlier period, but the calculation must reflect the dates involved.

A foreign resident who works in Australia and is not eligible for Medicare may qualify for an exemption covering the relevant period.

An international student with OSHC may need an MES before claiming an exemption.

A partner visa applicant who becomes eligible for Medicare halfway through the financial year may need to claim an exemption for the earlier period.

A bridging visa holder may require different treatment in two consecutive financial years and separate statements for each year.

Someone who leaves Australia and later files a tax return from overseas still needs to retain travel, visa and Medicare records.

The exemption depends on the person’s status and eligibility during the Australian financial year, not the location from which the return is lodged.

Before filing, taxpayers should confirm whether they were foreign residents for the entire year or part of it, whether they were eligible for Medicare, and the exact period of any ineligibility.

They should also confirm whether an MES is required, obtain it before lodging, check whether the exemption is full-year or part-year and keep records supporting the claim.

Private health cover and the Medicare levy surcharge should be reviewed separately.

The ATO instructions for 2025–26 state that a full-year foreign resident can claim a Medicare levy exemption for 365 days.

Services Australia says a person who was a foreign resident temporarily working in Australia or was not eligible for Medicare may not have to pay the levy.

The claim still depends on accurate dates, the person’s Medicare position and the required documentation.

For a temporary visa holder, the tax return can turn on whether those records are in place before filing.