Private ruling: Medical expenses tax offset
Published: January 2014
Ruling period: Year ended 30 June 2013
Date scheme commenced: 1 July 2012

Ruling: Q1: Can the cost of a spa bath be included in a calculation for the medical expenses tax offset? | A1: No.

Relevant facts and circumstances: You are an Australian resident for taxation purposes. You have an acute medical condition and your doctor recommended that you purchase a spa for use as treatment for your condition. Your therapeutic practitioners also agree with and recommend use of the spa to give relief from the symptoms to allow you to continue to work, and minimise ongoing assistance from health professionals. You purchased a swim spa.

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

Reasons for decision: Detailed Reasoning - Medical expenses tax offset: 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, to the extent that they are not reimbursed, or are eligible to be reimbursed, from Medicare and private health insurers. 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. The amount of any net medical expenses tax offset you can claim also depends on your level of income. | Detailed Reasoning - Medical or surgical appliances: Paragraph 159P(4)(f) of the ITAA 1936 defines medical expenses as payments made in respect of a medical or surgical appliance prescribed by a legally qualified medical practitioner. Taxation Ruling TR 93/34 explains the meaning of a medical or surgical appliance for the purposes of the medical expenses tax offset. The ruling states that a medical or surgical appliance is an instrument, apparatus or device which is manufactured as, or distributed as, or generally recognised to be an aid to the function or capacity of a person with a disability or an illness. It also provides that generally, a household or commercial appliance is not a medical or surgical appliance and that we need to look at the character of the appliance, not the purpose for which it is proposed or used. To be an aid to function or capacity, the appliance must help the person with the illness or disability to perform the activities of daily living. An appliance that merely has a therapeutic purpose, such as relieving, healing or preventing a medical condition, is not considered to be a medical or surgical appliance within the meaning of paragraph 159P(4)(f) of the ITAA 1936. | Detailed Reasoning - Swim Spa: In considering whether an item is a medical or surgical appliance, it is the character of the item which is determinative, not the purpose for which it is prescribed or used. While it is acknowledged that swim spa or hydrotherapy pool may aid the function of a person with a disability or illness, the items themselves retain their domestic function of being a spa/swimming pool in a household setting. Their character remains in essence pieces of household utility, and they are not medical or surgical appliances. Although the spa may be used by persons with a disability or illness, and may improve your mobility and general health, it is not generally distributed as, or generally recognised to be, an aid to the function or capacity of a person with a disability or an illness. A list of what is considered not to be a medical or surgical appliance can be found at paragraph nine of TR 93/34. Part (l) of paragraph nine specifically names spa pools as not being considered to be a medical or surgical appliance. Part (k) also names hydrotherapy pools as not being considered to be a medical or surgical appliance. As the spa is not a medical or surgical appliance the costs that you paid in relation to the spa do not qualify as medical expenses under subsection 159P(4) of the ITAA 1936. You are therefore not entitled to a medical expenses tax offset for this expenditure.