Private ruling: Medical expense tax offset
Published: June 2014
Ruling period: Year ending 30 June 2014
Date scheme commenced: 1 July 2013

Ruling: Q1: Is the cost of an occupational therapy driving assessment an eligible medical expense for the purposes of the medical expenses tax offset? | A1: No.

Relevant facts and circumstances: You are an Australian resident for tax purposes. You have been referred by a legally qualified medical practitioner to a specific occupational therapist for an occupation therapy driving assessment. The result of this assessment is used by a statuary authority to determine whether you are medically fit to drive and retain your licence. You have out-of-pocket expenses in relation to this assessment.

Relevant legislative provisions: Income Tax Assessment Act 1936 Section 159P | 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 under subsection 159P(1) of the Income Tax Assessment Act 1936 (ITAA 1936) where the taxpayer pays eligible medical expenses in an income year for themselves or a dependant who is an Australian resident. The medical expenses tax offset is only available if the amount of medical expenses, after being reduced by any entitlement to reimbursement from a health fund or government authority such as Medicare, exceeds the threshold amount. The amount of net medical expenses tax offset you can claim now depends on your level of income as the rebate is now income tested. This not only affects the threshold amount but also the percentage of the rebate you can claim. It should also be noted that the threshold amount is subject to indexation and will change in future income years. In order for a medical expense to be treated as a rebateable medical expense, the expense paid for must fall within the definition of 'medical expenses' as contained in subsection 159P(4) of the ITAA 1936. The Tax Office does not have the administrative powers or discretion to allow entitlements to tax offsets other than in accordance with the legislation. Based on your circumstances, paragraph 159P(4)(d) of the definition of 'medical expenses' of the ITAA 1936 would be the only provision where your expense can be considered to qualify as an medical expense. This paragraph provides for payments made for therapeutic treatment administered by direction of a legally qualified medical practitioner The general concept of therapeutic treatment 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 which 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 the disease or ailment. In your case, you have been referred by a legally qualified medical practitioner to a specific occupational therapist. However, the referral is not for the treatment of a condition or illness. The assessment has been requested to ensure that you are medically fit to drive, and fall within certain standards under the legislative requirements of a statuary authority. Even though you have been referred to a specific occupational therapist by a legally qualified medical practitioner for a drivers licence suitability assessment the assessment is not considered to be therapeutic treatment and as such does not fall under the net medical expenses tax offset legislation. Therefore the out of pocket amount you have paid for the assessment is not an eligible medical expense for the purposes of the net medical expenses tax offset.