Worth 2% of your income Two different exemptions
Medicare Levy Exemption for Visa Holders
The Medicare levy is 2% of your taxable income — and many visa holders do not have to pay it at all. There are two separate exemptions, they work differently, and one of them requires a statement that can take 8 weeks to arrive.
The two exemptions
| Category 2 — foreign resident | Category 3 — not entitled to Medicare | |
|---|---|---|
| Who it is for | A foreign resident for tax purposes | Temporary residents not entitled to Medicare benefits |
| What you need | Nothing extra — you assess it on your tax return | A Medicare Entitlement Statement from Services Australia |
| How long to start | Immediate | Up to 8 weeks, and it opens on 1 July |
| Where you claim it | Medicare levy section, exemption category 2 | Medicare levy section, exemption category 3 |
Category 2: you were a foreign resident
If you were a foreign resident for tax purposes for the full year, you can claim a full exemption from the Medicare levy.
If you were a foreign resident for only part of the year, you can still claim a full exemption for that period, but only if:
- you had no dependants during that period, or
- all your dependants were in a Medicare levy exemption category for that period.
The ATO's own example: Muhammad is a resident of Pakistan who comes to Australia for short work stints and always returns home. He is a foreign resident for tax purposes, so he can claim a full exemption from the Medicare levy.
Category 3: not entitled to Medicare benefits
This one is for temporary residents who are not entitled to Medicare. You need a Medicare Entitlement Statement (MES) from Services Australia showing the period you were not entitled.
Apply from 1 July → wait up to 8 weeks → then lodge your tax return
You must wait for the MES before lodging. Applying late is the single most common reason a visa holder's tax return is held up — and it is entirely avoidable by applying on 1 July.
Having an MES does not automatically exempt you. All your dependants, including your spouse, must also be exempt from Medicare benefits for the same period. If your partner is an Australian resident entitled to Medicare, you cannot claim it.
Frequently asked questions
Do visa holders pay the Medicare levy?
Often no. There are two separate exemptions: a foreign resident for tax purposes can claim a full exemption (category 2), and someone not entitled to Medicare benefits can claim one with a Medicare Entitlement Statement (category 3). The levy is 2% of your taxable income, so on $80,000 it is worth $1,600.
What is a Medicare Entitlement Statement?
A statement from Services Australia showing the period in an income year you were not entitled to Medicare benefits because you were a temporary resident for Medicare purposes. You need it before you can claim exemption category 3.
How long does a Medicare Entitlement Statement take?
The ATO says it can take up to 8 weeks to be processed, applications open on 1 July, and you must wait until you receive it before lodging your tax return. Apply early — this is the most common cause of a delayed return for visa holders.
Does my spouse need to be exempt too?
Yes. If you have dependants, all of them must also be in a Medicare levy exemption category for the same period. If your partner is an Australian resident entitled to Medicare, you cannot claim the exemption for that period.
What about working holiday makers?
Working holiday makers are generally not entitled to Medicare, so category 3 may apply — but it is not automatic. You need the Medicare Entitlement Statement, and the dependant rule still applies.
Is this the same as the Medicare levy surcharge?
No, they are opposite ends of the same levy. The exemption is relief from the 2% levy; the surcharge is an extra 1% to 1.5% for higher earners without private hospital cover. Foreign residents are also exempt from the surcharge.
Rules from the Australian Taxation Office and the not-entitled-to-Medicare page, checked 13 October 2026. General information only — not tax advice.