Private ruling: Medical expense Tax Offset
Published: May 2012
Ruling period: Year ended 30 June 2012
Date scheme commenced: 1 July 2011

Ruling: Q1: Are the costs of a psychologist for counselling included as a medical expense in the calculation of a medical expenses tax offset? | A1: No

Relevant facts and circumstances: Your general practitioner recommended counselling as you and your spouse were experiencing communication issues in your relationship. Your costs were for both individual and relationship counselling. You have provided a copy of a paid invoice and have not received any reimbursements from your private health insurer. You have stated that your general practitioner recommended you to see a counsellor and did not provide a referral to a particular counsellor. You sourced a psychologist who is also a counsellor.

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 a government or public authority or a society, association or fund. Medical expenses are defined in subsection 159P(4) of the ITAA 1936. Paragraph (d) of the definition of medical expenses includes payments for therapeutic treatment administered by direction of a legally qualified medical practitioner. Fees paid to a psychologist do not satisfy the meaning of the term medical expenses because a psychologist is not a legally qualified medical practitioner. However, the fees paid to a psychologist may satisfy the meaning of the term medical expenses as defined under paragraph (d) of the definition if the treatment is considered to be therapeutic and is administered at the direction of a legally qualified medical practitioner. Therapeutic treatment not formally prescribed by a doctor but rather undertaken on the basis of a mere suggestion or recommendation by a doctor to the patient is not enough for the treatment to qualify. The patient must be referred to a particular person for a specific treatment ( Case A53 69 ATC 313, 15 CTBR (NS) Case 30). In you case, your doctor recommended that you see a counsellor. Your doctor did not give you a referral to a particular counsellor, and did not oversee the treatment given to you by the counsellor. Therefore, the cost paid to your psychologist for counselling cannot be included as a medical expense in calculating the medical expenses tax offset.

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