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

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

Relevant facts and circumstances: You were admitted to hospital where you were diagnosed as suffering from an illness. Treatment was under the supervision of a doctor. You later had some time in the rehab wing. You have damage to your muscles and nerve endings in your feet, legs and hands. You were no longer able to walk and were confined to a bed or chair. During your last week in rehab, the doctor recommended a program. Individual packages are created for each client. Your program included a qualified nurse as the case manager, a physiotherapist to improve your mobility and muscle and nerve usage, an ACAT assessor, an occupational therapist to help with your every day living and an assistant to help with personal hygiene and household tasks. The program went for several weeks. You pay a weekly fee for the program. Your progress was reviewed each week. The review panel included a doctor who provided direction, advice and instruction to the program team.

Relevant legislative provisions: Income Tax Assessment Act 1936 Subsection 159P(4)

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: (a) to a legally qualified medical practitioner, nurse or chemist, or a public or private hospital, in respect of an illness or operation; or (d) for therapeutic treatment administered by direction of a legally qualified medical practitioner; or (h) as remuneration of a person for services rendered by him as an attendant of a person who is blind or permanently confined to a bed or an invalid chair; 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 physiotherapy and occupational therapy are examples of therapeutic treatment. To qualify as a medical expense under paragraph 159P(4)(d) of the ITAA 1936 , the therapeutic treatment must be administered by direction of a legally qualified medical practitioner. In your case, you were referred to the program by a doctor. The treatment received under the program is regarded as therapeutic and is administered under the instructions or guidance of a doctor. The expenses you have incurred for the program are medical expenses for the purposes of the medical expenses tax offset.

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