Private ruling: Medical expenses tax offset
Published: December 2011
Ruling period: Year ended 30 June 2009 | Year ended 30 June 2010 | Year ended 30 June 2011
Date scheme commenced: 1 July 2008

Ruling: Q1: Can the amounts you have paid for the services of agency carers (including the superannuation guarantee (SG) contributions) be included as eligible medical expenses in the calculation of a medical expenses tax offset? | A1: Yes.

Relevant facts and circumstances: You have been permanently confined to a wheelchair and require full time care. You contracted an agency to provide you with appropriately screened and skilled persons (carers), registered with the agency for 184 hours of nursing care per week. The agency acts as a referral agency only and coordinates the nursing services provided to you. The carers provided are employed by you for the duration of the booking. The carers' duties include personal care such as shower assistance, dressing, grooming, personal hygiene, organising and administering medication as well as shopping and meal preparation, laundering, light cleaning and housekeeping. They also accompany you to medical appointments and activities outside the home. You are invoiced monthly in advance and the agency remunerates the carers on your behalf. You do not pay an administration fee to the agency. You pay the SG contributions directly into the carers nominated superannuation funds.

Relevant legislative provisions: Income Tax Assessment Act 1936 Subsection 159P(1) | Income Tax Assessment Act 1936 Subsection 159P(4)

Reasons for decision: Summary: A medical expenses tax offset is available to a taxpayer under subsection 159P(1) of the Income Tax Assessment Act 1936 (ITAA 1936) where the taxpayer pays medical expenses in an income year for themselves or a dependant who is an Australian resident, to the extent that they are not reimbursed, or are eligible to be reimbursed, from a government or public authority or a society, association or fund. The medical expenses tax offset is 20% of the amount by which the net medical expenses exceed the threshold. For the 2010-11 financial year the threshold is $2,000. Please note that the threshold amount is subject to indexation and will change in future years. Paragraph (h) of the definition of medical expenses in subsection 159P(4) of the ITAA 1936 includes payments made as remuneration of a person for services rendered by him or her as an attendant of a person who is blind or permanently confined to a bed or an invalid chair The requirement that the services be provided as an attendant 'of a person' necessitates that the services provided by the attendant (to a person who is blind or permanently confined to a bed or an invalid chair) are primarily to assist the person with their personal care, for example bathing, washing, dressing and feeding. In order to qualify as a medical expense, paragraph (h) of the definition does not require that the payment be made to a specific person but rather that it be paid 'as remuneration of a person' for services the person provides as an attendant. There is no requirement therefore that the payment be made directly to the person who provides the care. In your case you are permanently confined to a wheelchair and require 24 hour care. The agency provides you with appropriately screened and skilled carers in your own home. Even though they perform some basic household tasks, the main duty of the carers is to provide you with personal care. The monthly payment made to the agency and the SG contributions qualify as eligible medical expenses. Therefore, you are entitled to include these expenses in your calculation of the medical expenses tax offset.

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