Private ruling: Medical expenses tax offset
Published: August 2014
Ruling period: Year ended 30 June 2014 | Year ended 30 June 2015 | Year ended 30 June 2016 | Year ended 30 June 2017
Date scheme commenced: 1 July 2013

Ruling: Q1: Do expenses incurred for naturopathy treatment, including medicines dispensed by the naturopath qualify as medical expenses for medical expenses tax offset (METO) purposes for the 2013-14 and 2014-15 financial years? | A1: Yes. | Q2: Are you entitled to a METO for the 2015-16 and 2016-17 financial years? | A2: No.


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

Reasons for decision: Summary: On 14 May 2013, the government announced in the 2013-14 Budget that it will phase out the net METO. From 1 July 2013, those taxpayers who received the offset in their 2012-13 income tax assessment will continue to be eligible for the offset for the 2013-14 income year if they have eligible out-of-pocket medical expenses above the relevant claim threshold. Similarly, those who receive the tax offset in their 2013-14 income tax assessment will continue to be eligible for the offset in 2014-15. The changes mentioned above will not apply to all taxpayers - the offset will continue to be available for taxpayers with out-of-pocket medical expenses relating to disability aids, attendant care or aged care expenses until 1 July 2019. A medical expenses tax offset is available to a taxpayer under sub-section 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 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. The term medical expenses is defined in subsection 159P(4) of the ITAA 1936. Paragraph (d) of the definition includes payments for therapeutic treatment administered by direction of a legally qualified medical practitioner. Therefore, the expenditure you have incurred through your consultations with the naturopath qualify as eligible medical expenses and you are entitled to include the cost in your calculation of the METO for the 2013-14 and 2014-15 financial years. However, as stated above, the METO is phased out after the 2014-15 year. As such, you will not be entitled to the METO for the 2015-16 or future years.

Relevant facts: You claimed a medical expenses tax offset for the 2012-13 financial year. | You suffer from a medically diagnosed disease. Your doctor has referred you for complementary therapeutic treatment by a specific naturopath for an indefinite period. | The naturopathic treatment includes medicines dispensed by them. | The naturopath receives all of your test results which have been ordered by other attending health professionals, and your doctor checks on the progress of your therapeutic treatment. | You are not a member of a private health fund, and you cannot claim the costs of the therapeutic treatment through Medicare. | You keep receipts for all of your medical expenses.