Private ruling: Medical expenses tax offset
Published: November 2013
Ruling period: Year ended 30 June 2013
Date scheme commenced: 1 July 2012

Ruling: Q1: Do the net costs associated with your spouse's overseas hospital treatment qualify as eligible medical expenses for the purposes of the medical expenses tax offset? | A1: Yes.


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 under subsection 159P(1) of the Income Tax Assessment Act 1936 (ITAA 1936) where the taxpayer pays eligible medical expenses in an income year for themselves or a dependant who is an Australian resident. The medical expenses tax offset is only available if the amount of medical expenses, after being reduced by any entitlement to reimbursement from a health fund or government authority such as Medicare, exceeds the threshold amount. Subsection 159P(4) of the ITAA 1936 defines medical expenses which are eligible for the medical expenses tax offset. Paragraph (a) of the definition of medical expenses in subsection 159P(4) of the ITAA 1936 includes payments made to a legally qualified medical practitioner, nurse or chemist, or a public or private hospital, in respect of an illness or operation. However, it is not necessary that the payments be made to a resident of Australia or that they are paid in Australia. Therefore, medical expenses paid overseas may qualify for the tax offset. In your case, you paid for medical expenses in relation to your spouse's treatment overseas. The amounts you have paid to the hospitals and any medications purchased through a chemist/pharmacy are considered to be eligible medical expenses for medical expenses tax offset purposes. Accordingly, you are entitled to include the net costs in the calculation of the medical expenses tax offset.

Relevant facts: Your spouse underwent hospital treatment overseas for a medical condition and was under the care of a qualified medical practitioner.