Private ruling: Medical expenses tax offset
Published: November 2011
Ruling period: Year ended 30 June 2011
Date scheme commenced: 1 July 2010

Ruling: Q1: Does the cost in respect of the purchase of a medical appliance qualify as a medical expense for the purposes of the medical expenses tax offset? | A1: Yes

Relevant facts and circumstances: You have a medical condition. You were referred to a specialist by your doctor. As part of your treatment you were prescribed by your doctor to purchase a medical appliance. The medical appliance helps you with your medical condition thus preventing you from a life threatening event. You have provided a copy of the invoice for the cost of the medical appliance. You received no reimbursement from Medicare or a private health fund. You have continual follow up with your doctor and specialist who monitor your progress.

Relevant legislative provisions: Income Tax Assessment Act 1936 Section 159P | Income Tax Assessment Act 1936 Subsection 159P(4)

Reasons for decision: Summary: Section 159P of the Income Tax Assessment Act 1936 (ITAA 1936) provides that a tax offset is allowable to a taxpayer whose net medical expenses (that is, medical expenses less any amount paid or payable by Medicare or a private health fund) in the year of income exceed a certain threshold. Paragraph (f) of the definition of medical expenses in subsection 159P(4) of the ITAA 1936 defines medical expenses as 'payments made in respect of a 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' 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. The ruling states that an appliance is an aid to function or capacity if it helps the person with the disability or illness perform the activities of daily living. 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. You have purchased a medical appliance prescribed by your doctor to assist you with your medical condition. The medical appliance is manufactured, distributed as, and generally recognised to be the most effective aid in helping you with your medical condition on a daily basis. The medical appliance meets the requirements of a 'medical or surgical appliance' for the purposes of section 159P of the ITAA 1936. Therefore, the cost incurred in purchasing the appliance is an eligible medical expense for the purposes of the medical expenses tax offset.

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