Private ruling: Medical Expense
Published: November 2011
Ruling period: Year ended 30 June 2012 | Year ended 30 June 2013
Date scheme commenced: 1 July 2011

Ruling: Q1: Is the out of pocket expense that you paid for home modifications an eligible medical expense? | A1: No

Relevant facts and circumstances: Your spouse has an illness and uses a wheelchair for mobility and because of this modification was required to your home to allow them to maintain their safety and independence in the home. The modification was to convert a room in the house into a bathroom. An occupational therapist was involved in the assessment of your spouse's needs. The home modification was organised under the Home & Community Care (HACC) program. The total cost of the modification work was over $XX,000 and your contribution towards the cost is in excess of $X000. Your contribution will be paid over two years.

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 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 a government or public authority or a society, association or fund. Subsection 159P(4) of the ITAA 1936 defines medical expenses which are eligible for the medical expenses tax offset. Paragraph (f) of the definition of medical expenses in subsection 159P(4) of the ITAA 1936 includes 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' 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. You have incurred expenses for home modifications that have been made to assist your spouse. Although these home modifications are required due to your spouse's medical condition, they have a general domestic or household purpose. Building alteration expenses are not payments for an instrument, apparatus or device recognised as an aid to the function or capacity of a disabled person. Therefore, the modifications to your home are not considered medical or surgical appliances for the purposes of paragraph (f) of the definition of medical expenses in subsection 159P(4) of the ITAA 1936. Accordingly the costs you incurred in relation to the home modifications are not eligible medical expenses.

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