Private ruling: Medical expenses tax offset
Published: February 2015
Ruling period: Year ended 30 June 2014
Date scheme commenced: 1 July 2013

Ruling: Q1: Are you eligible to claim the medical expenses tax offset in the 2013-14 financial year? | A1: No.

Relevant facts and circumstances: You did not receive the medical expenses tax offset for the 2012-13 financial year. Your adjusted taxable income was greater than $88,000 for the 2013-14 financial year. You total net medical expenses for the 2013-14 financial year were less than $5,100 after reimbursements from Medicare and your private health fund. You are single with no dependants.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 159P

Reasons for decision: Summary: A medical expenses tax offset is available under subsection 159P(1) of the Income Tax Assessment Act 1936 where the taxpayer pays eligible medical expenses in an income year for themselves or a dependant who is an Australian resident. The medical expenses tax offset is only available if the amount of medical expenses, after being reduced by any entitlement to reimbursement from a health fund or government authority such as Medicare, exceeds the threshold amount. This tax offset is income tested. The percentage of net medical expenses you can claim and the threshold amount is determined by your adjusted taxable income and family status. It should also be noted that the threshold amount is subject to indexation and will change in future income years. Single taxpayers with no dependents who have an adjusted taxable income of more than $88,000 are entitled to claim 10% of eligible medical expenses over $5,100. The medical expenses tax offset is being phased out between the 2013-14 and 2018-19 financial years and eligibility for this offset has changed. Transitional arrangements will allow taxpayers to claim the offset from the 2013-14 income year until the end of the 2018-19 income year, but only for those medical expenses relating to disability aids, attendant care or aged care. In addition, for the 2013-14 and 2014-15 income years, taxpayers will be eligible to claim the full range of medical expenses (as defined currently) but only if they have received an amount of the net medical expenses tax offset in the previous income year (or in both 2012-13 and 2013-14 in respect to claims in the 2014-15 income year). In your case, you did not receive a medical expenses tax offset in the 2012-13 financial year. Therefore the only eligible expenses are those that relate to an aid for a person with a disability, aged care or attendant care. Additionally, your medical expenses are below the relevant threshold amount. Therefore you are not eligible for the medical expenses tax offset for the 2013-14 financial year.