Private ruling: medical expenses tax offset
Published: January 2014
Ruling period: Year ended 30 June 2012
Date scheme commenced: 1 July 2011

Ruling: Q1: Do the costs of a program for your dependant qualify as an eligible medical expense for medical expenses tax offset purposes? | A1: Yes.

Relevant facts and circumstances: Your dependant suffers from a medical condition which requires specialised treatment. They were referred to a specific practitioner and associated program by their legally qualified medical practitioner. Their legally qualified medical practitioner has an active and ongoing involvement with the practitioner and associated program. They have ongoing input to the type of treatment your dependant has from the program, and receive regular reports from the program on your dependant's treatment. The specialist treatment your dependant receives is part of their rehabilitation program.

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 to a taxpayer under subsection 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 medical expenses tax offset is 20% of the amount by which the net medical expenses exceed $2,060 for the 2011-12 year of income. The term medical expenses is defined in subsection 159P(4) of the ITAA 1936 to include payments made for therapeutic treatment administered by direction of a legally qualified medical practitioner. It was held in Case A53 69 ATC 313; 15 CTBR (NS) Case 30 that the mere suggestion or recommendation by a medical practitioner that the patient undergoes therapeutic treatment is not sufficient for the payment to qualify as medical expenses. The patient would have to be referred by a medical practitioner to a particular person for specific treatment. In the context of subsection 159P(4), 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 disease ( Case R95 84 ATC 633; (1984) 27 CTBR (NS) Case 148 ). Furthermore, therapeutic treatment as a concept is concerned with healing or curing, rather than preventing the need for therapy (Case T67 (1967) 18 TBRD 346;(1967) 14 CTBR (NS) Case 31 ). Although the treatment must be administered by direction of a legally qualified medical practitioner, the treatment need not be administered by such a practitioner. In your case, your dependant was referred through their legally qualified medical practitioner to attend an intervention program specifically for children with disabilities. This referral was required as part of her rehabilitation program. Your dependant was specifically referred to the particular program and the legally qualified medical practitioner who referred your dependant has active and ongoing involvement with the treatment received by your dependant from the program. Therefore, the out of pocket expenses that you have paid for your dependant attending the program qualify as eligible medical expenses within the meaning of subsection 159P(4) of the ITAA 1936 and you are entitled to include the costs in your calculation of the medical expenses tax offset.