International Students in Australia: The 2% Medicare Levy Exemption You May Be Missing
- G&A Editorial Team
- Jul 7
- 3 min read
Many international students don't realise, when lodging their first tax return, that they may be entitled to an exemption from the 2% Medicare Levy - a charge most Australian taxpayers are required to pay. This article explains this entitlement and the correct process for claiming it.
What is the Medicare Levy?
The Medicare Levy is a compulsory charge, generally 2% of taxable income, that funds Australia's public healthcare system (Medicare) for those entitled to access it.
Why might international students be exempt?
Holders of a Student Visa (Subclass 500) are generally not entitled to Medicare, unless they come from a country with a Reciprocal Health Care Agreement (RHCA) with Australia. Because they aren't entitled to Medicare benefits, they are not required to pay the 2% levy.
Important note: Only 11 countries worldwide have a Reciprocal Health Care Agreement (RHCA) with Australia (including the UK, Ireland, New Zealand and a few Nordic countries). If you're from a country not on this list, you generally qualify for a full 2% exemption for the relevant financial year (provided no dependants fall under a category requiring the levy). Check with us to confirm whether your country of origin is on the RHCA list.
This exemption is NOT automatic
This is where many students go wrong: even if you're not entitled to Medicare, the ATO will not automatically apply this exemption when you lodge. You must proactively apply for a Medicare Entitlement Statement (MES) - an official document from Services Australia confirming the period you weren't entitled to Medicare benefits.
How to apply for an MES
When to apply: Applications open from 1 July each year and apply to the previous financial year (e.g., apply from 1 July 2026 for the 2025-26 financial year). Applications submitted earlier cannot be processed, unless you are permanently leaving Australia.
How to apply:
Online: Via myGov, by linking the Individual Healthcare Identifier (IHI) service, then accessing the MES dashboard to submit your application.
By form: Download and complete Form MS015, attaching a copy of your passport's photo page for identity verification.
Processing time: Can take up to 8 weeks if submitted during peak season (July-November), due to high application volumes.
Once approved: Services Australia will send your MES to your registered address. Keep it and attach it when lodging your tax return, entering the correct number of exempt days.
Important things to keep in mind
If you lodge your return before receiving your MES, you can generally lodge based on the outcome you expect but if the actual determination differs, you'll need to amend your tax return accordingly.
The MES is only one factor the ATO considers if you have a dependant (e.g. a spouse) who is required to pay the Medicare Levy, you may not qualify for a full exemption.
The MES does not automatically renew even if you were exempt last year, you must reapply each financial year.
How Gordon Du & Associates can help
We carefully review each visa category to make sure you don't miss out on legitimate entitlements from confirming your eligibility for an MES, to guiding you through the correct application process and timing, to lodging your return accurately based on your actual circumstances.
Contact Gordon Du & Associates for guidance on applying for your Medicare Entitlement Statement, correctly and on time.
Disclaimer: This post contains general information only and does not constitute specific tax or financial advice. Please consult a registered tax agent regarding your specific circumstances.
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