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

Ruling: Q1: Do the costs of your overseas treatment qualify as a medical expense for the purposes of the medical expenses tax offset? | A1: Yes.

Relevant facts and circumstances: You have an illness. In 2012 you required treatment. Following extensive research you discovered a type of treatment was available overseas. This treatment was not available in Australia. You contacted the overseas centre which provided you with an overseas doctor to contact. You communicated with this doctor and sent many emails. You and your Australian doctor sent scans and other medical records to your overseas doctor. The overseas doctor recommended the treatment for you. Specialist doctors provided the treatment. Both your overseas and Australian doctors oversee your progress.

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

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. To qualify for the tax offset the medical expenses must be paid by you in respect of yourself or your dependant. The amount of the tax offset is calculated as 20% of the excess of net medical expenses over the threshold of $2,060 for the 2011-12 income year. The term "medical expenses" is defined in sub-section 159P(4) of the ITAA 1936 and include payments: (d) for therapeutic treatment administered by direction of a legally qualified medical practitioner; 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 the disease ( Case R95 84 ATC 633; 27 CTBR (NS) Case 148 ). The Commissioner accepts that the treatment received is an example of therapeutic treatment. To qualify as a medical expense under paragraph (d) of the definition of medical expenses in subsection 159P(4) of the ITAA 1936, the therapeutic treatment must be administered by direction of a legally qualified medical practitioner. However, it is not necessary that the payments be made to a resident of Australia or that they are paid in Australia or that the legally qualified medical practitioner is in Australia. Therefore, expenses paid for overseas treatment may qualify as a medical expense for the purposes of calculating your medical expenses tax offset. In your case, you paid medical expenses overseas in relation to your treatment. This treatment was administered by legally qualified medical practitioners overseas. The overseas doctors as well as your Australian doctor continue to monitor your progress. It is considered that the treatment received overseas satisfies the requirements of paragraph (d) of the definition of medical expenses in subsection 159P(4) of the ITAA 1936. Therefore the expenses paid for this treatment are eligible medical expenses for medical expenses tax offset purposes.

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