Private ruling: Medical expenses tax offset
Ruling period: Year ending 30 June 2010 | Year ending 30 June 2011 | Year ending 30 June 2012
Date scheme commenced: 1 July 2009

Ruling: Q1: Are you entitled to claim a medical expenses tax offset for payments you make in regard to medical treatment for your relative? Answer: No

Relevant facts and circumstances: You live in extended family situation of a number people,. One of your relative's young children has been diagnosed with an illness. The child's paediatrician provided a referral letter for therapy with a services provider. The therapy is carried out five days per week at present, mainly at your home. You meet the full costs of the therapy as your relative and spouse are unable to do so. You are the principal income earner for the family and meet most of the expenses such as groceries, utilities household repairs and vehicle running costs.


Reasons for decision: Summary: Section 159P of the Income Tax Assessment Act 1936 (ITAA 1936) provides that if an amount is paid by the taxpayer in the year of income as medical expenses in respect of himself or herself, or in respect of a dependant who is a resident, less any amount paid to the taxpayer or any other person, and any amount which the taxpayer or any other person is entitled to be paid, in respect of those medical expenses by a government authority or by a society, association or fund shall, for the purposes of this section, be treated as a rebatable amount in respect of that year of income. The tax offset for medical expenses available under section 159P of the ITAA 1936 are for a dependant which is defined in section 159P(4) as being: (a) The spouse of the taxpayer (b) A child of the taxpayer less than 21 years of age (c) A person in respect of whom the taxpayer is entitled to a rebate under section 159J or (d) A person included in class 3 or class 4 in the table in subsection 159J(2) in respect of whom the taxpayer would be entitled to a rebate under section 159J but for subsection 159J(1A) Section 159J of the ITAA 1936 provides that if a taxpayer contributes to the maintenance of a person who is a resident of Australia during an income year, the taxpayer may be entitled to a tax offset. In order for you to be entitled to include medical expenses you pay for your relative in your medical expenses tax offset claim your relative would be required to be your dependant as defined in section 159J. Whilst you may be living in the same house and provide your relative with food, clothing, lodging and help pay for their medical and educational expenses in your situation you would not be entitled to any dependant rebate (including notional rebates) for your relative under section 159J. As such you cannot be considered to be maintaining your relative as a dependant. Therefore as your relative is not considered to be a dependant you are unable to include any medical expenses you pay for them in your claim for a medical expenses tax offset.

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