TaxBot is an AI-powered tax and expense app for everyone — from individuals wanting a bigger tax refund to sole traders, freelancers and small businesses in Australia and the United States. You scan a receipt or upload a bank statement, and TaxBot's AI categorises each transaction, finds the deductions you're entitled to, tracks GST/BAS, and estimates your tax in real time.

How does TaxBot help me save on tax?

TaxBot reads your receipts and bank statements and uses AI to identify every work-related expense you can legally claim — matched to your occupation — including items people commonly miss like subscriptions, tools, phone, vehicle and depreciation. Claiming more legitimate deductions lowers your taxable income, so you keep more of what you earn.

Does TaxBot handle GST and BAS in Australia?

Yes. TaxBot tracks GST collected and paid, breaks it down by BAS quarter and full financial year (1 July – 30 June), and gives you a clear net-GST figure to help you prepare your Business Activity Statement.

TaxBot is for anyone who wants to pay less tax and keep better records — everyday individuals and employees claiming work-related deductions, as well as sole traders, freelancers, contractors, gig and rideshare drivers, tradies and small business owners. If you have expenses you can claim, TaxBot helps you find and track them without an accountant doing everything manually.

Yes — you can start free with no credit card. The free Starter plan includes essential tools and a monthly allowance of AI actions. Paid plans (from $14.99/month AUD) add unlimited receipts, more AI, and extra modules like invoicing, mileage and depreciation.

Can TaxBot turn my bank statement into deductions?

Yes. Upload a PDF or image of your bank statement and TaxBot's AI extracts every transaction, detects the financial year automatically, flags likely business deductions based on your occupation, and lets you save them to your records in one step.

Medicare Levy Surcharge: How Private Health Insurance Saves You Money

Understand when paying for private health cover actually costs less than paying the surcharge

Over 1.2 million Australians are paying the Medicare Levy Surcharge unnecessarily. That is more than $1.8 billion flowing to the ATO that could instead be spent on private health coverage, which would not only avoid the surcharge but also provide genuine health benefits. If you earn over $93,000 as a single or $186,000 as a family and do not have private hospital cover, you are almost certainly paying more tax than you need to.

The Problem: A Hidden Tax That Hits Higher Earners Hard

The Medicare Levy Surcharge (MLS) is one of Australia's most misunderstood taxes. While the standard Medicare Levy of 2% applies to most taxpayers, the MLS is an additional charge of 1% to 1.5% that applies only to higher-income earners who do not hold adequate private hospital insurance.

The sting is in the detail. The MLS is calculated on your taxable income plus any reportable fringe benefits, total net investment losses (including negatively geared properties), and reportable superannuation contributions. This means your MLS-assessable income is often significantly higher than your taxable income suggests.

Consider Marcus, a senior project manager earning $140,000 per year. He assumed the MLS was based on his taxable income after deductions, bringing him below the threshold. What Marcus did not realise was that his $15,000 in salary-sacrificed super contributions and $8,000 net rental loss pushed his MLS-assessable income to $163,000. His MLS bill? $2,038 per year, paid entirely to the ATO with nothing in return.

The tragedy is that Marcus could have purchased a basic hospital cover policy for around $1,200 per year, avoided the surcharge completely, and gained actual health insurance protection. Instead, he paid 70% more to the ATO and received nothing but a tax receipt.

This scenario plays out across Australia every tax season. High-income professionals, business owners, and investors unknowingly choose the more expensive option because they either do not understand the MLS calculation or believe private health insurance is not worth it.

Why So Many Australians Get This Wrong

The confusion around the Medicare Levy Surcharge stems from several factors that the ATO does not make particularly clear.

First, the income thresholds are not straightforward. The MLS uses a concept called MLS Income, which differs from taxable income. MLS Income includes taxable income, reportable fringe benefits (even though they are not taxed in your hands), reportable super contributions (salary sacrifice and personal deductible contributions), and net investment losses (the amount by which investment deductions exceed investment income).

Second, the tiered rate structure creates confusion. The MLS is not a flat rate. For singles, it is 1% for income between $93,001 and $108,000, 1.25% for income between $108,001 and $144,000, and 1.5% for income above $144,000. Family thresholds are exactly double, plus an additional $1,500 per dependent child after the first.

Third, many people believe that any private health insurance qualifies. It does not. To be exempt from the MLS, you must hold private hospital cover with an excess of no more than $750 for singles or $1,500 for families. Extras-only cover does not count. Ambulance-only cover does not count. Basic hospital cover is the minimum requirement.

Finally, the Lifetime Health Cover loading adds complexity. If you do not take out hospital cover by July 1 following your 31st birthday, you pay a 2% loading for every year you delay, up to a maximum 70% loading. This loading makes insurance more expensive the longer you wait, yet many people delay precisely because they find the system confusing.

The Solution: Calculate Your Breakeven Point

The decision between paying the MLS and purchasing private hospital cover is ultimately a mathematical one. Here is how to calculate your breakeven point and make the financially optimal choice.

Step 1: Calculate Your MLS Income

Start with your taxable income, then add back any reportable fringe benefits (shown on your payment summary), reportable super contributions (salary sacrifice and personal deductible contributions), and net investment losses (if your investment deductions exceed investment income).

For example, if your taxable income is $120,000, you salary sacrifice $15,000 into super, and you have a net rental loss of $5,000, your MLS Income is $140,000.

Step 2: Determine Your MLS Rate

Using the 2024-25 thresholds for singles, a $140,000 MLS Income falls into Tier 2 at 1.25%. For families, remember to double the threshold and add $1,500 per dependent child after the first.

Step 3: Calculate Your Annual MLS

Multiply your MLS Income by your applicable rate. At $140,000 with a 1.25% rate, your annual MLS is $1,750. This is the amount you will pay to the ATO if you do not have qualifying hospital cover.

Step 4: Compare to Private Health Premiums

Research basic hospital cover policies from major insurers. Focus on policies that meet the MLS exemption requirements, meaning a maximum excess of $750 for singles or $1,500 for families. Basic hospital cover for a single typically costs $1,000 to $1,600 per year depending on your age and state.

Step 5: Factor in the Private Health Insurance Rebate

Do not forget the government rebate. For those under 65 with income below $93,000, the rebate is 24.608%. Even at higher incomes, reduced rebates still apply until income exceeds $186,000 for singles. The rebate effectively reduces your premium cost.

Step 6: Consider the True Value

Unlike the MLS which provides no benefit, private hospital cover gives you actual protection. Shorter wait times for elective surgery, choice of doctor and hospital, and coverage for private room accommodation are tangible benefits beyond the tax savings.

Real Numbers: MLS vs Private Health Insurance

Let us work through three scenarios at different income levels to see the financial impact.

Scenario 1: Single Earning $100,000

At the first MLS tier, this taxpayer faces a 1% surcharge, costing $1,000 annually. Basic hospital cover with a $750 excess costs approximately $1,100 to $1,300 per year. After applying the 16.405% rebate (for this income level), the net premium is around $920 to $1,090. Result: similar cost, but with private cover you get actual insurance protection. The smart choice is private health.

Scenario 2: Single Earning $150,000

At the top MLS tier, this taxpayer faces a 1.5% surcharge, costing $2,250 annually. Basic hospital cover still costs around $1,100 to $1,400 per year, though no rebate applies at this income level. Result: private health saves approximately $850 to $1,150 annually while providing coverage. The smart choice is definitively private health.

Scenario 3: Family Earning $250,000 Combined

At the middle family tier (1.25%), this family faces an MLS of $3,125 annually. Family hospital cover costs approximately $2,400 to $3,200 per year with no rebate at this income level. Result: depending on the policy chosen, the family could save $0 to $725 annually while gaining hospital coverage for the entire family. The smart choice remains private health for the protection value alone.

The pattern is clear: for most higher-income Australians, private hospital cover costs the same or less than the MLS while providing genuine health benefits.

How TaxBot Helps You Navigate the MLS

Calculating your MLS exposure and comparing it to private health options does not have to be complicated. TaxBot's Medicare Levy Surcharge calculator makes the decision simple.

Automatic MLS Income calculation: TaxBot aggregates your taxable income, reportable super, fringe benefits, and investment losses to determine your true MLS Income
Threshold monitoring: Get alerts when your income approaches MLS thresholds so you can take action before tax time
Premium comparison tool: Compare your calculated MLS against current hospital cover premiums from major insurers
Rebate calculator: See your exact private health insurance rebate entitlement based on your income tier
Family threshold adjustments: Automatically calculates adjusted thresholds based on number of dependents
Year-end optimisation: Strategies to manage your MLS income through super contributions and investment timing

TaxBot users with MLS exposure save an average of $1,400 annually by switching from paying the surcharge to holding appropriate private cover.

Key Takeaways: Making the Right Choice

The Medicare Levy Surcharge is designed as an incentive to take out private health insurance, not as a punishment for those who do not. The government wants you to have private cover because it reduces pressure on the public health system.

The numbers rarely lie: if your MLS Income exceeds $93,000 as a single or $186,000 as a family, you will almost always pay less by taking out basic private hospital cover than by paying the surcharge. And unlike the MLS, which provides nothing in return, private health insurance gives you genuine protection when you need medical treatment.

Do not forget the Lifetime Health Cover loading. Every year you delay taking out hospital cover after turning 31 adds 2% to your future premiums. By age 45, someone without prior cover faces a 28% loading on top of standard premiums. Acting now not only saves the MLS but also locks in lower premiums for life.

Take Control of Your Health Tax Today

The Medicare Levy Surcharge is entirely avoidable for those who understand their options. Whether you choose to pay the surcharge or take out private cover should be an informed decision, not an accidental one.

Review your most recent tax return and calculate your MLS Income. Compare the surcharge to the cost of basic hospital cover. Consider the rebate you may be entitled to. And factor in the genuine health benefits that come with private insurance.

For most higher-income Australians, the choice is clear: private health insurance is not just good for your health, it is good for your wallet too.