Private ruling: Medical expenses tax offset - medical appliances
Published: September 2012
Ruling period: Year ending 30 June 2012
Date scheme commenced: 1 July 2011

Ruling: Q1: Are window shutters and tinted windows 'medical or surgical appliances' for the purposes of the medical expenses tax offset? | A1: No

Relevant facts and circumstances: The taxpayer's spouse suffers from a chronic illness. The illness is exacerbated by periods of very hot weather. The health foundation for the taxpayer's spouse's illness has recommended the installation of heat reducing apparatus in your residence to assist in managing the illness. These items were installed during the 2011-12 financial year.

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

Reasons for decision: Detailed Reasoning - Medical expenses tax offset: A medical expenses tax offset is available under section 159P of the Income Tax Assessment Act 1936 (ITAA 1936), where you incur medical expenses in an income year for yourself or a dependant who is 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. The threshold for the 2011-12 financial year is $2,060. The medical expenses tax offset is 20% of the amount by which the net medical expenses exceed the threshold. The term 'medical expenses' is defined in subsection 159P(4) of the ITAA 1936 to include payments in respect of a medical or surgical appliance prescribed by a legally qualified medical practitioner, and for therapeutic treatment which has been administered by direction of a legally qualified medical practitioner. It also covers payments to doctors, nurses, chemists, dentists, opticians and optometrists, in respect of an illness or operation. | Detailed Reasoning - 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' for the purposes of paragraph 159P(4)(f) of the ITAA 1936 as an instrument, apparatus or device which is manufactured as, distributed as, or generally recognised to be an aid to the function or capacity of a person with a disability or an illness ( Ildes ATC at 4216; ATR at 954, and (1963) 14 TBRD Case P29 ; 11 CTBR (NS) Case 63 ). TR 93/34 also provides that generally, a household or commercial appliance is not a 'medical or surgical appliance'. To be an aid to function or capacity, the item must help the person with the illness or disability perform the activities of daily living (paragraph 4 of TR 93/34). The question of whether the appliance is an aid to function or capacity looks at the character of the appliance and not the purpose for which the appliance is prescribed or used. An item that merely has a therapeutic purpose, such as relieving, healing or preventing a medical condition, is not considered to be a medical or surgical appliance within the meaning of paragraph 159P(4)(f) of the ITAA 1936 (paragraph 7 of TR 93/34). Paragraph 8 of TR 93/34 includes the following among the examples of a 'medical or surgical appliance': bath seats used by invalids or aged persons, car controls for the disabled, crutches, hearing aids, invalid chairs and wheel chairs. While the list is not exhaustive and does not include all items which qualify as a 'medical or surgical appliance', it gives guidance as to the types of items which qualify. Paragraph 9 of TR 93/34 includes the following examples of what is not considered to be 'medical or surgical appliances': commercial or household air conditioners, lifts for conventional use, swimming pools and wheelchair ramps. The installation of the heat reducing apparatus does not fall into the definition of a medical or surgical appliance. Whilst it is appreciated that the installation of these items may assist in relieving the severity of your spouse's illness in times of hot weather, these items are not "manufactured as, distributed as, or generally recognised to be an aid to the function or capacity of a person with a disability or an illness". These expenses are therefore not eligible to contribute to the net medical expenses for the purpose of calculating the tax offset.

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