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

Ruling: Q1: Are you eligible to claim the medical expenses tax offset in the 2013-14 financial year? | A1: No.

Relevant facts and circumstances: You are an Australian resident for tax purposes. You have not received the medical expenses tax offset in your 2012-13 income tax assessment. You have paid for various medical related expenses in the 2013-14 financial year which included one small expense in relation to a disability aid. None of the expenses were for attendant care or aged care.

Relevant legislative provisions: Income Tax Assessment Act 1936 Section 159P | Income Tax Assessment Act 1936 Subsection 159P(1) | Income Tax Assessment Act 1936 Paragraph 159P(1B)(a)

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. This tax offset is income tested. The percentage of net medical expenses you can claim and the threshold amount is determined by your adjusted taxable income (ATI) and family status. It should also be noted that the threshold amount is subject to indexation and will change in future income years. The medical expenses tax offset is being phased out between the 2013-14 and 2018-19 financial years and eligibility for this offset has changed. Transitional arrangements will allow taxpayers to claim the offset from the 2013-14 income year until the end of the 2018-19 income year, but only for those medical expenses relating to disability aids, attendant care or aged care. In addition, for the 2013-14 and 2014-15 income years, taxpayers will be eligible to claim the full range of medical expenses (as defined currently) but only if they have received an amount of the net medical expenses tax offset in the previous income year (or in both 2012-13 and 2013-14 in respect to claims in the 2014-15 income year). In your case, you have not received an amount of the medical expenses tax offset in your 2012-13 income tax assessment so you are limited to claims relating to disability aids, attendant care or aged care only. Accordingly, out of all the medical relation expenses you have paid for in the 2013-14 financial year only the expenditure on the disability aid is considered to be an eligible medical expense for the purposes of the net medical expenses tax offset. As the amount expended on the disability aid is below the threshold amount you are not eligible to make a claim in the 2013-14 financial year.