Private ruling: Medical expenses tax offset
Published: November 2012
Ruling period: Year ended 30 June 2012
Date scheme commenced: 1 July 2011

Ruling: Q1: Are the expenses where a Medicare benefit was paid, eligible medical expenses for the purposes of the medical expenses tax offset? | A1: Yes. | Q2: Are the expenses where a Medicare benefit was not paid, eligible medical expenses for the purposes of the medical expenses tax offset? | A2: No.

Relevant facts and circumstances: Your partner decided to have a cosmetic operation. The doctor suggested fixing a medical problem during the same surgery. You received a Medicare benefit for some aspects of the operation but not for others.

Relevant legislative provisions: Income Tax Assessment Act 1936 section 159P

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 Medicare or a private health fund. The medical expenses tax offset is 20% of the amount by which the net medical expenses exceed the threshold amount ($2,060 for 2011-2012). Subsection 159P(4) of the ITAA 1936 defines 'ineligible medical expenses' as payments to a legally qualified practitioner, nurse or chemist, or a public or private hospital, in respect of a cosmetic operation that is not a professional service for which a Medicare benefit is payable. In your case your partner underwent an operation that contained both cosmetic and medical components. A Medicare benefit was only payable for part of the operation while other parts were not covered. Therefore, for the purposes of the medical expenses tax offset, your partner's operation contained both eligible and ineligible medical expenses. Consequently only the expenses for which a Medicare benefit was paid can be included in the medical expenses tax offset calculations.

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