Medicare levy exemption category 2: when does foreign-resident status qualify?

If you were a foreign resident for tax purposes for the full year, the Australian Taxation Office (ATO) says you can claim a full exemption from the Medicare levy. The ATO identifies this as exemption category 2 in the Medicare levy section of your tax return. If you were a foreign resident for tax purposes for only part of the year, you can still claim a full exemption for that period if you had no dependants for that period or all your dependants were in a Medicare levy exemption category for that period.

checked 1 October 2026

How do the full-year and part-year rules compare?

The ATO gives the following rules:

Period	Condition	Medicare levy exemption
Full year	The person was a foreign resident for tax purposes for the full year	Full exemption from the Medicare levy
Part of the year	The person had no dependants for that period, or all their dependants were in a Medicare levy exemption category for that period	Full exemption for that period

The part-year result depends on the dependant position during that same period. The ATO does not describe a part-year foreign resident as automatically qualifying without those stated conditions.

How do I claim category 2?

The ATO says the exemption is claimed when you lodge your tax return.

• Lodge your tax return.
• In the Medicare levy section, identify this exemption as exemption category 2.

Does category 2 also answer my visa or health-cover question?

This article provides general information about the ATO's tax-return rule. Check your policy documents and the Department of Home Affairs page for your visa. The category 2 exemption is the Medicare levy label used in the tax return and does not replace those checks.

Sources

• Australian Taxation Office: Foreign residents Medicare levy exemption

FAQ

Can I claim category 2 if I was a foreign resident for tax purposes for the full year?

Yes. The ATO says that a person who was a foreign resident for tax purposes for the full year can claim a full exemption from the Medicare levy. In the tax return, the exemption is identified as category 2 in the Medicare levy section.

What if I was a foreign resident for tax purposes for only part of the year?

You can still claim a full exemption for that period if you had no dependants for that period or all your dependants were in a Medicare levy exemption category for that period.

When is the Medicare levy exemption claimed?

You claim it when you lodge your tax return.

Does category 2 settle my visa or health-cover requirements?

This FAQ explains the Medicare levy exemption rule only. Check your policy documents and the Department of Home Affairs page for your visa.