Private ruling: Medical expenses tax offset - medical machine
Published: August 2012
Ruling period: Year ended 30 June 2012
Date scheme commenced: 1 July 2011

Ruling: Q1: Do expenses incurred in respect of the purchase of a machine mask qualify as medical expenses for the purposes of the medical expenses tax offset? | A1: Yes


Relevant legislative provisions: Income Tax Assessment Act 1936 Section 159P | Income Tax Assessment Act 1936 Section 159P(4) | Income Tax Assessment Act 1936 Section 159P(1) | Income Tax Assessment Act 1936 Section 159P(3A)

Reasons for decision: Detailed Reasoning - Medical Expenses Tax Offset: Subsection 159P(1) of the Income Tax Assessment Act 1936 (ITAA 1936) provides a tax offset for amounts paid by a taxpayer for eligible medical expenses in respect of himself/herself or in respect of a dependant who is a resident, to the extent that they are not reimbursed, or are eligible to be reimbursed, from a government or public authority or a society, association or fund. Subsection 159P(3A) of the ITAA 1936 provides that for the 2012 income tax year the amount of the tax offset is 20% of the net medical expenses exceeding $2,060.00 in that year of income. For the cost of a machine to be considered for the purposes of the medical expenses tax offset, the machine must first qualify as a medical or surgical appliance as per paragraph (f) of the definition of medical expenses in subsection 159P(4) of the ITAA 1936. Its use must also have been prescribed by a legally qualified medical practitioner. Taxation Ruling TR 93/34 describes a 'medical or surgical appliance' as being an instrument, apparatus or device that is manufactured, distributed or generally recognised as an aid to the function or capacity of a person with a disability or an illness. An appliance is an aid to function or capacity if it helps a person in performing activities of daily living. In your circumstances it is accepted that the machine are manufactured as, distributed as, and generally recognised to be the most effective aid in helping a person with this condition function on a daily basis. Consequently, the expenses you incurred on the purchase of the machine will qualify as a medical expense for the purposes of section 159P of the ITAA 1936. | Detailed Reasoning - Other Comments: A medical expenses tax offset will be available if your net medical expenses exceed $2,060.00 in the 2012 income year. Your net medical expenses are the medical expenses you have paid for yourself or your dependants less any refunds you have received or could get from Medicare or a private health fund. You can claim a medical expenses tax offset of 20% of your net medical expenses over $2,060.00.

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: You have been diagnosed with a medical condition following studies which were covered by bulk billing. | To treat this condition you were prescribed a machine by a doctor. | You paid for a rental buy option for the first month, at the end of which you purchased the machine. | You have a copy of your Doctor's prescription and receipts for payment.