Private ruling: Medical expenses Tax offset
Date of advice: 3 April 2017
Published: August 2017
Ruling period: The year ended 2016
Date scheme commenced: 1 July 2015

Ruling: Q1: Can the installation of a lift in your place of residence be included as a disability aid for medical expenses tax offset? | A1: No

Relevant facts and circumstances: You were diagnosed with a disease. You require a walking aid to move around and your instability makes it difficult to access upstairs unaided. You have a two storey home. The lift is a suite lift built and installed in accordance with Australian Standard AS1735.18 - for Private Residence- Automatically Controlled. You are now in a wheelchair. The lift is capable of meeting the needs of wheelchair access. The total cost of installing the lift is more than $70,000.

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 (ITAA 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 or the National Disability Insurance scheme, 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 (ATI) and family status. Under recent changes to legislation, the net medical expense tax offset (NMETO) is being phased out between the 2013-14 and 2018-19 financial years and eligibility for this offset has changed. Claims for this offset are now restricted to net eligible expenses for disability aids, attendant care or aged care only. | Detailed Reasoning - Disability aids: Based on your circumstances paragraph 159P(1B)(a) of the ITAA 1936 would be the only provision where your expenses can be considered. Paragraph 159P(1B)(a) of the ITAA 1936 states that for the 2013-14 to 2018-19 years of income, an amount that would otherwise be paid as medical expenses is treated as not being paid as medical expenses unless the payment relates to an aid for a person with a disability. A person who is considered to be disabled is entitled to claim the cost of a disability aid towards meeting the net medical expense relevant threshold. This is provided that the aid is designed to be an 'aid to function or capacity'. That is, the aid helps a person in performing activities of daily living or provides assistance to alleviate the effect of the disability. Taxation Ruling TR 93/34 Income tax: medical expense rebate - meaning of medical or surgical appliance explains the meaning of a 'medical or surgical appliance' as being an instrument, apparatus or device which is manufactured, distributed or generally recognised as an aid to the function or capacity of a person with a disability or an illness. This definition looks to the character of the appliance, not the purpose for which it is prescribed or used. It is not sufficient that a medical practitioner prescribes an appliance for medical or surgical ends. Paragraph nine of TR 93/34 provides a list of examples of what is not considered to be a medical or surgical appliance. Listed among them are lifts for conventional commercial or household use. Even though TR 93/34 was written in relation to legislating that is no longer current, the principles can still be applied to your situation as it provides guidance on when an aid is considered to be manufacture as, distributed as and generally recognised to be an aid to the function or capacity of a person with a disability. In your case, building alterations have been made to your residence to install a lift which has been manufactured for use in a single private residence in accordance with AS/NZS 1735.18. The lift you have had installed is not manufactured, distributed or generally recognised to be a disability aid. The item is commercially available and can be installed and used in any residence. While it is acknowledged that installation of the lift will enable you move between floors of the house. The purchase and installation of this item is not considered to be an eligible medical expense for the purposes of the medical expense tax offset and you are not entitled to include the cost in your calculation of the medical expenses tax offset. Although we acknowledge your medical condition and the hardships you have subsequently endured, the legislation is very specific as to the circumstances under which a taxpayer is entitled to the net medical expenses tax offset. The Commissioner is bound by the law and does not have the discretion to allow you to claim the offset if the expenses do not meet the definition of a disability aid. | Detailed Reasoning - Other information: You refer to previously issued rulings. The rulings applied to legislation which has been amended. Therefore the definition of medical expense in these rulings is not relevant for your current circumstance.

The claim of the installation and purchase of a Lift