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

Ruling: Q1: Can you include the costs of special dietary products as a medical expense in calculating the medical expenses tax offset? | A1: No.

Relevant facts and circumstances: You have a disease. The only treatment for the disease is to follow a special diet. You incur expenses to purchase the special dietary products.

Relevant legislative provisions: Income Tax Assessment Act 1936 Section 159P

Reasons for decision: Summary: A medical expense tax offset is available under section 159P of the Income Tax Assessment Act 1936 (ITAA 1936), where you paid for medical expenses in an income year for yourself or a dependant whilst an Australian resident. The medical expense tax offset is only available if the amount of medical expenses (reduced by any entitlement to reimbursement from a health fund or government authority) in an income year exceeds the threshold amount. Medical expenses are defined in subsection 159P(4) of the ITAA 1936 to include payments for therapeutic treatment provided the treatment is administered at the direction of a legally qualified medical practitioner. Therapeutic treatment as a concept is concerned with healing or curing, rather than preventing the need for therapy. Therapeutic treatment involves the exercise of professional skill in the medical field in a way that normally involves the person administering the treatment using drugs or physical or mental processes of one kind or another for the purpose of curing or managing a disease. The longstanding view affirmed in Taxation Ruling IT 2146 is that the cost of foods for special dietary purposes does not qualify as therapeutic treatment. This is affirmed by Case R95 84 ATC 633 where a taxpayer who suffered allergic reactions to gluten, purchased special gluten-free products from a health food store. The Boards of Review found that the cost of foods for special dietary purposes did not qualify as therapeutic treatment and rejected the claim. In your situation, you have purchased foods to conform to a special diet. Whilst the dietary modifications have been recommended by your doctor, the foods are not specialised, being everyday foods, albeit without certain additives or natural chemicals. The cost of purchasing these foods does not fall within the definition of medical expenses. As such, you are not entitled to include these items when calculating your entitlement to a medical expenses tax offset.