Private ruling: Medical expenses tax offset
Published: December 2012
Ruling period: Year ended 30 June 2012
Date scheme commenced: 1 July 2011

Ruling: Q1: Are you entitled to include the net cost of your spouse's surgery in your calculation for a medical expenses tax offset? | A1: Yes

Relevant facts and circumstances: You and your spouse are Australian residents for taxation purposes. Your spouse under went a medical procedure to correct a condition. The condition is a result of a congenital deformity or abnormality. Your doctor applied for and received approval from Medicare to undertake the surgery and for you to claim a Medicare benefit. All medical costs have been paid and you have forwarded a claim to Medicare.

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. The medical expenses tax offset is 20% of the amount by which the net medical expenses exceed $2,060 for the 2011-12 income year. Medical expenses are defined in subsection 159P(4) of the ITAA 1936. Paragraph (a) of the definition includes payments made to a legally qualified practitioner in respect of an illness or operation. The term 'operation' is not defined in the ITAA 1936 and therefore it is again necessary to look at the ordinary meaning of the term. An 'operation' in a medical sense means an act or series of acts performed on the body of a patient for their relief or to restore them to a normal condition. It involves the use of surgical instruments as distinguished from therapeutic treatment. Subsection 159P(4) of the ITAA 1936 defines 'ineligible medical expenses' as payments to a legally qualified practitioner in respect of a cosmetic operation that is not a professional service for which a Medicare benefit is payable. In your case, your spouse under went surgery. Your surgeon applied for and received approval from Medicare for the operation and for you to claim a Medicare benefit. The surgery is accepted as being an operation performed in order to correct or improve a disorder. The net medical expenses in relation to the surgery qualify as 'medical expenses' for the purpose of the medical expenses tax offset under subsection 159P(4) of the ITAA 1936.

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