Private ruling: Net medical expenses tax offset
Date of advice: 19 December 2018
Published: April 2019
Ruling period: Year ending 30 June 20XX | Year ending 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Is your dog a disability aid under paragraph 159P(1B)(a) of the Income Tax Assessment Act 1936 (ITAA 1936)? | A1: Yes | Q2: Are the costs incurred in relation to the maintenance of the dog classified as a medical expense under paragraph 159P(4)(i) of the ITAA 1936 in order to receive a medical expense tax offset? | A2: No | Q3: Are the expenses incurred in transporting the dog classified as a medical expense under paragraph 159P(4)(i) of the ITAA 1936 in order to receive a medical expense tax offset? | A3: No

Relevant facts and circumstances: This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling. You had an accident where you incurred injuries. Prior to your accident, you had a dog. You attended a doctor, with a history of a disability You attended this doctor on several occasions with your dog. You were provided with correspondence from a doctor. You applied for service dog registration. A doctor supported your application. The dog has been approved by a Department as an approved assistance dog under the section 54 of the Equal Opportunity Act 2010: wherein that persons with a disability cannot be discriminated against in a public area or refused accommodation if that person has an assistance dog. You spent considerable time in another country. You returned to seek medical treatment You were required to travel without your dog. You were subsequently advised that you were not medically cleared to travel. You incurred expenses in flying your dog to your location. You incur other expenses in relation the dog, such as: ● Pet chemist costs ● Dog registration fees ● Veterinary costs ● Grooming costs ● Vaccination and immunisation testing costs

Relevant legislative provisions: Income Tax Assessment Act 1936 Section 159P Summary | While your dog may meet the definition of a disability aid under subsection 159P(1B) of the ITAA 1936, we consider that the nature of the assistance provided to you by the dog is that of companionship or social therapy. Accordingly, expenses incurred in relation to the dog do not satisfy the definition of medical expenses under paragraph 159P(4)(i) of the ITAA 1936 and they will not be eligible expenses in determining any net medical expenses tax offset available to you. | Detailed reasoning | A net medical expenses tax offset is available under subsection 159P(1) of the Income Tax Assessment Act 1936 (ITAA 1936). The net medical expenses tax offset is being phased out. From 2013-14 until 2018-19 years of income, claims for this offset are restricted to expenses that meet both the existing definition requirements for medical expenses and that relate to disability aids, attendant care or aged care only. | The term medical expenses is defined in subsection 159P(4) of the ITAA 1936. In your case, the most relevant part of this definition is paragraph 159P(4)(i) of the ITAA 1936, for the maintenance of a dog used for the guidance or assistance of, but not social therapy for, a person with a disability, being a dog that the Commissioner is satisfied is properly trained in the guidance or assistance of persons with disabilities; but does not include ineligible medical expenses. | Disability aids | Paragraph 159P(1B)(a) of the ITAA 1936 states that for the 2013-14 to 2018-19 years of income, an amount that would otherwise be paid as medical expenses is treated as not being paid as medical expenses unless the payment relates to an aid for a person with a disability. | As highlighted in the Explanatory Memorandum for the Tax Laws Amendment (2014 Measures No. 1) Bill 2014 , whether an expense is related to disability aids will largely be a matter of fact and circumstances. Disability aids are items of property manufactured as, distributed as, or generally recognised to be, an aid to the function or capacity of a person with a disability but, generally will not include ordinary household or commercial appliances. Examples include wheelchairs, walking frames, hearing aids, car controls for the disabled and similar appliances. | To be an aid to function or capacity, the item must help the person with the illness or disability to perform the activities of daily living. | In your case we accept that the dog helps you with your illness or disability and would therefore be considered a disability aid for the purposes of subsection 159P(1B) of the ITAA 1936. | However, in order to be considered eligible medical expenses, the relevant expenses must also meet one of the definitions provided in subsection 159P(4) of the ITAA 1936. | Assistance Dogs | Paragraph 159P(4)(i) of the ITAA 1936 defines a medical expense for the purposes of the net medical expenses tax offset as a payment for the maintenance of a dog used for the guidance or assistance of, but not social therapy for, a person with a disability, being a dog that the Commissioner is satisfied is properly trained in the guidance or assistance of persons with disabilities. | The Explanatory Memorandum for the Tax Laws Amendment (2004 Measures No. 1) Bill 2004 , provides the following further guidance: | 1.4 Under the amendment, expenses incurred in maintaining a dog for guiding or assisting a person with a disability will be qualifying medical expenses for the purposes of the medical expenses tax offset, where the Commissioner is satisfied that the dog is properly trained in the guidance or assistance of persons with disabilities. | … | 1.7 The law currently allows payments for the maintenance of a dog used for the guidance of a person who is blind, being a dog that the Commissioner is satisfied is properly trained by a public institution in the guidance of people who are blind. However, payments in respect of 'hearing dogs' or 'service or assistance dogs' cannot presently be claimed. | 1.8 Typically, a 'hearing dog' assists a person who is deaf or hearing impaired by responding to a variety of auditory cues, such as a baby crying, a smoke alarm, an alarm clock, a door buzzer or bell or a ringing telephone. 'Assistance dogs' (or 'service dogs') typically provide assistance to people with physical disabilities by retrieving objects that are out of reach, pulling wheelchairs, opening and closing doors, turning light switches off and on or assisting ambulatory persons to walk by providing balance and counterbalance. | 1.9 This bill amends subsection 159P(4) of the ITAA 1936 to broaden the list of eligible medical expenses to include payments incurred in maintaining a properly trained dog for people with disabilities. Consistent with the current provisions, the dog will need to be one that the Commissioner is satisfied is properly trained in guiding or assisting people with disabilities. | 1.10 Without limiting the scope of the amendment, dogs that will typically become eligible are 'hearing dogs' and 'service or assistance dogs'. However, this bill does not allow for claims relating to 'social/therapy dogs' (or similar) (emphasis added) . A 'social/therapy dog' is typically selected or trained to provide companionship to people in nursing homes, hospitals and other institutions. | While the law provides for the maintenance of eligible assistance dogs to be claimed as an expense, there is no definition of maintenance within the tax law. As such ‘maintenance’ takes on its ordinary meaning. | Maintenance is defined as in the Macquarie dictionary: | 1. the act of maintaining. | 2. the state of being maintained. | 3. means of provision for maintaining; means of subsistence. | Examples of deductable expenses for an eligible assistance dog would be food, vet bills, annual vaccinations, flea and tick treatment and service animal signs. | Application to your circumstances | Prior to your accident, you had a dog. | We acknowledge that the dog has completed a public access test, where it was recommended that the dog be allowed on passenger aircraft. | We have not been provided evidence of any specialised assistance training that the dog has undertaken. No examples of specific tasks performed by the dog have been provided to distinguish that the dog is a dog used for physical guidance or assistance, rather than social therapy for a person with a disability. | While we accept that the dog provides you with some assistance in relation to your illness or disability, given the breed, age and size of the dog, we consider that the extent of the assistance would be in the nature of companionship and social therapy. As discussed above, expenses in relation to this type of dog are not expenses that the net medical expenses tax offset was intended to cover. | Accordingly, the expenses you have incurred in relation the dog, including transport, are not eligible medical expenses for the purposes of the net medical expenses tax offset.