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

Ruling: Q1: Does the cost of a surrogate mother or birth of your child qualify as a medical expense for the purposes of calculating a medical expense tax offset? | A1: No.


Relevant legislative provisions: Income Tax Assessment Act 1997 Section 159P(1) | Income Tax Assessment Act 1997 Section 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 you pay medical expenses in an income year for yourself or a dependant who is an Australian resident, to the extent that you are not reimbursed, or are eligible to be reimbursed, from a government or public authority or a society, association or fund. A 'dependant' is defined in subsection 159P(4) of the ITAA 1936 as: · The spouse of the taxpayer; or · A child of the taxpayer who is under 21 years of age; or · A person for whom the taxpayer is entitled to a dependants rebate, or a child or student in respect of whom the taxpayer qualifies for a notional dependants rebate. The definition of "medical expenses" in sub-section 159P(4) of the ITAA 1936 includes payments to a legally qualified medical practitioner or a public or private hospital in respect of an illness or an operation. Taxation Ruling IT 2359 states that infertility is accepted as an illness within the ordinary meaning of the term. The expenses you incurred relate to another person who acts as a surrogate for your child. While it is accepted that infertility is an illness, the expenses for the surrogate were not paid in respect of yourself or a dependant. They do not qualify as a medical expense. Therefore, you cannot include any of the costs involved in the surrogacy as part of a calculation for a medical expense 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: You have issues with fertility. | You selected a surrogate mother who lived overseas. | You incurred to bring the surrogate to Australia, accommodation and the surrogate's medical expenses.