Private ruling: medical expenses tax offset
Published: March 2012
Ruling period: Year ending 30 June 2012 | Year ending 30 June 2013 | Year ending 30 June 2014 | Year ending 30 June 2015
Date scheme commenced: 01 July 2011

Ruling: Q1: Can the cost of special foods that form part of your child's diet, be included in the calculation of a medical expenses tax offset? | A1: No. | Q2: Can the cost of special supplements that form part of your child's diet, which are purchased from retail outlets and manufacturers be included in the calculation of a medical expenses tax offset? | A2: No. | Q3: Can the cost of special supplements that form part of your child's diet, which are purchased from a chemist be included in the calculation of a medical expenses tax offset? | A3: Yes.


Relevant legislative provisions: Income Tax Assessment Act 1936 subsection 159P(1). | Income Tax Assessment Act 1936 subsection 159P(4).

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. The medical expenses tax offset equals 20% of the amount by which the net medical expenses exceed the threshold amount for that income year. Medical expenses are defined in subsection 159P(4) of the ITAA 1936. The parts of subsection 159P(4) relevant to your situation are: (a) payments to a legally qualified medical practitioner, nurse or chemist, or a public or private hospital, in respect of an illness or operation or (d) payments for therapeutic treatment provided the treatment is administered at the direction of a legally qualified medical practitioner. In your case you have incurred various expenses. Each type will be considered as to their eligibility to be included when calculating your entitlement to a medical expenses tax offset: SPECIAL DIETARY FOOD In Case R95 (1984) 27 CTBR (NS) 1154; 84 ATC 633 it was held that the cost of foods for special dietary purposes did not qualify as therapeutic treatment. Taxation Ruling IT 2146 considers that the cost of food substitutes or special dietary foods are not medical expenses unless they are prescribed by a legally qualified medical practitioner as being in respect of an illness and purchased from a chemist. You purchase special food for your child and whilst the dietary modifications have been recommended by your doctor, the foods are not specialised, being everyday foods, albeit with certain qualities. While we acknowledge the cost of many of the diet's foods is greater than the ordinary equivalent, the cost of purchasing these foods does not fall within the definition of medical expenses. These food items, do not qualify as a medical expense under paragraph 159P(4)(d) of the definition of medical expenses. These expenditures cannot be included when calculating the medical expenses tax offset. NON-CHEMIST PURCHASES Supplements and pain medication can fall within the definition of therapeutic treatment under paragraph 159P(4)(d). The cost of these supplements and pain medication will only be eligible medical expenses where they are prescribed by a legally qualified medical practitioner. Therapeutic treatment as a concept is concerned with healing or curing, rather than preventing the need for therapy ( Case T67 (1967) 18 TBRD 346;(1967) 14 CTBR (NS) Case 31 ). The Administrative Appeals Tribunal found in Case R95 84 ATC 633; Case 148 27 CTBR (NS) 1154 that therapeutic treatment necessitated the exercise of professional skill in the medical field. This would normally involve the person administering the treatment using chemical agents or drugs or some physical and mental processes which are directed towards the cure or management of a disease or ailment. For treatment to be regarded as being administered by direction of a legally qualified medical practitioner, the treatment need not be administered by such a practitioner; however the treatment needs to be advised, prescribed or ordered by a legally qualified medical practitioner. It also requires monitoring to some extent by the medical practitioner. It was held in Case A53 69 ATC 313; (1969) 15 CTBR (NS) Case 30 that the mere suggestion or recommendation by a medical practitioner that the patient undergoes therapeutic treatment is not sufficient for the payment to qualify as medical expenses. The patient would have to be referred by a medical practitioner to a particular person for specific treatment. Your expenditure on these items, does not qualify as a medical expense under paragraph 159P(4)(d) of the definition of medical expenses because they are not administered at the direction of a legally qualified medical practitioner. These expenditures cannot be included when calculating the medical expenses tax offset. CHEMIST PURCHASES Your expenditure on items purchased from chemists that relate to your child's illness qualifies as a medical expense under paragraph 159P(4)(a) of the definition of medical expenses. These items would include your purchases of zinc supplements, omega 3, multi vitamins and panadol. These expenditures can be included when calculating the medical expenses tax offset. The purchases of items (for example sugar free lollies) from a chemist that are not related to an illness do not qualify as medical expenses nor do purchases of chemist-type items from retail outlets or health food stores. These expenditures cannot be included when calculating the medical expenses tax offset.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. If you have any concerns about this ruling you wish to discuss, you will find our contact details in the fact sheet. | Relevant facts: Your child has a condition and is receiving treatment for various aspects of the condition. | The condition is controlled by a special diet. | Your child's food consists of special meals that are made or prepared by you and your spouse in your home. | You buy specific foods and ingredients from local supermarkets, health food stores, and overseas suppliers and you grow organic vegetables at home. | You buy vitamins, supplements, pain relief tablets and sugar free lollies from a pharmacist and directly from an overseas manufacturer. | The diet has been prescribed by your child's paediatrician and since being on the diet your child has had a significant improvement in their overall development. | Your child's diet is monitored and adjusted where necessary to improve their condition.