Medicare Levy Surcharge Planning for Arborists With Changing Business Profits
Published on October 7, 2026
Medicare Levy Surcharge Planning for Arborists with Changing Business Profits can help you avoid an unexpected tax bill when a strong year lifts your personal income above the Medicare Levy Surcharge threshold. Arborists can see taxable income move quickly because of seasonal work, large contracts and delayed payments. The Medicare Levy Surcharge (MLS) is separate from the standard Medicare levy most Australian taxpayers pay. MLS may apply when your income for MLS purposes exceeds the relevant income thresholds and you, your spouse or your dependants do not have appropriate private patient hospital cover.
Medicare Levy Surcharge Rates for Arborists
For the 2026–27 financial year, the MLS income thresholds start at $105,000 for a single person and $210,000 for families. MLS rates are 1%, 1.25% and 1.5%, depending on your income tier, while the family income threshold increases by $1,500 for each MLS dependent child after the first. Private health insurance can affect whether you pay the MLS, but it does not usually help you avoid the Medicare levy. The surcharge depends on your income and the period you are liable.
Could stronger arborist profits trigger an unexpected Medicare Levy Surcharge?
Schedule a complimentary consultation with us today to estimate your surcharge before tax time.
Changing Business Profits Can Shift Your MLS Position
Profitable tree removals, council work or emergency jobs can push your income for MLS purposes into a higher tier even when cash flow feels tight. If you operate through a company or trust, business profit does not automatically equal personal MLS income because salary, dividends or trust distributions may affect your tax return.
total reportable fringe benefits
reportable super contributions
total net investment losses
other amounts included under the MLS rules.
Planning Around the MLS Income Thresholds
Start by forecasting personal income for the full income year rather than relying only on bank balances. Review the forecast after major jobs or asset sales that could cause your income to exceed an MLS threshold. Use these steps:
Forecast business profit to 30 June.
Estimate what will flow into personal taxable income.
Add reportable fringe benefits, reportable super contributions and total net investment losses where applicable.
Compare projected MLS income with income thresholds and rates.
Review whether your hospital cover meets the required standard.
Example: A couple close to the family income threshold should review both partners’ income. Family tiers depend on combined income for MLS purposes, not just the higher income earner.
Private Hospital Cover Must Meet the MLS Rules
Not every private health insurance product helps avoid the MLS. Extras only cover does not count. Private patient hospital cover must be from a registered health insurer for hospital treatment in Australia, with an excess of $750 or less for a single policy or $1,500 or less for other policies. Lifetime Health Cover is different and can affect private hospital insurance premiums depending on when cover is first taken out. If your income exceeds an MLS threshold, compare the likely surcharge with the cost and suitability of health cover rather than choosing a policy for tax reasons alone.
How ACT Tax Group Can Help with Medicare Levy Surcharge Planning
We can help you estimate MLS income, review family income and understand how changing business profits may affect what you pay. We can also review how salary, distributions and investments interact with the MLS threshold. If your arborist business has had a stronger or uneven year, book a consultation with our Institute of Public Accountants (IPA)-certified team. We can help you prepare for tax time and make practical decisions using your income.
Grow your tree care business with Accounting Built for Arborists
From start-up to expansion, our accounting team supports your tax, payroll, and cash flow — so you can focus on running your business safely and profitably.
Keeping MLS Planning Connected to Your Business Forecast
Medicare Levy Surcharge planning works best as part of wider tax planning. Reviewing taxable income, family income, private hospital cover and MLS income thresholds can reduce surprises when you lodge your tax return. For arborists with changing profits, update your forecast whenever income changes materially. This gives you time to understand whether you may pay the MLS and whether private health cover should be considered before year end.
Frequently Asked Questions
How Much Is the Medicare Levy Surcharge?
How much is the Medicare Levy Surcharge depends on your annual income, family circumstances and whether you have suitable private hospital cover. For the 2026–27 financial year, the surcharge ranges from 1% to 1.5% for people whose income is above the relevant threshold and who do not have qualifying hospital cover. Your combined taxable income forms part of your combined income for MLS purposes if you have a spouse. Two people with similar annual income may pay tax differently depending on their family income and circumstances.
Does a Dependent Child Affect the MLS Family Income Threshold?
Yes. If you have an MLS dependent child, your family income threshold can increase when you have more than one dependent child. For 2026–27, the family threshold increases by $1,500 for each dependent child after the first. Basic hospital cover can help you avoid paying the surcharge only if it meets the requirements for appropriate private patient hospital cover. Your annual income, family situation and type of cover should all be reviewed together before making a decision.
Lukasz Klekowski
