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

Ruling: A1: No.

Relevant facts and circumstances: You are an Australian resident for income tax purposes. You reside alone in your own unit at a retirement village. The retirement village is not an approved provider of aged care under the Aged Care Act 1997. You have had ongoing health issues you have had an aged care assessment showing that you require high level care. The carer's responsibilities include all cooking and preparation of meals, ordering in of food and grocery requirements, cleaning and domestic assistance, dressing, bathing and all associated personal and hygiene care, as well as dispensing your medications from a Webster pack. The carers are not legally qualified medical practitioners or nurses. They are attendant care workers who have a Certificate III in aged care and a current first aid certificate. You are not blind or permanently confined to a bed or an invalid chair.

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

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, exceeds the threshold amount. The amount of net medical expenses tax offset you can claim now depends on your level of income as the rebate is now income tested. This not only affects the threshold amount but also the percentage of the rebate you can claim. Please note that the threshold amount is subject to indexation and will change in future income years. 'Medical expenses' are defined in subsection 159P(4) of the ITAA 1936. Paragraph (a) includes payments to a legally qualified medical practitioner, nurse or chemist, or a public or private hospital in respect of an illness or operation and, paragraph (h) as remuneration of a person for services rendered by them as an attendant of a person who is blind or permanently confined to a bed or an invalid chair. In your case, due to your ongoing health issues you have had an aged care assessment showing that you require high level care. Whilst we acknowledge that without this full-time home care, you would have to live in residential care, you do not satisfy the specific criteria defined in paragraph (h) as you are not blind, or permanently confined to a bed or an invalid chair. Also your carers are not legally qualified medical practitioners or nurses and do not satisfy the criteria in paragraph (a). The payments you make for your home care do not qualify as eligible medical expenses. Therefore, you are not entitled to include these costs in your calculation of the medical expenses tax offset. It should be noted that the legislation is very specific as to the circumstances under which a taxpayer is entitled to a medical expenses tax offset in respect of the cost of carers. The Commissioner does not have the discretion to allow a taxpayer who requires a carer for reasons other than those specified in the legislation to claim a medical expenses tax offset in respect of the costs of the carer.

Subject: Medical expense tax offset: Are the payments you have made for home care considered to be medical expenses for the purposes of the medical expenses tax offset?