Private ruling: Medical expenses tax offset
Published: May 2012
Ruling period: Year ended 30 June 2011
Date scheme commenced: 1 July 2010

Ruling: Q1: Do the costs of naturopath consultations and herbal medications qualify as a medical expense for the purpose of the medical expenses tax offset? | A1: Yes.


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

Reasons for decision: Summary: A medical expense tax offset is available to a taxpayer under section 159P of the Income Tax Assessment Act 1936 (ITAA 1936), where the taxpayer incurs medical expenses for themselves or a dependant who is an Australian resident. The medical expenses tax offset is only available if the amount of medical expenses (reduced by any entitlement to reimbursement from a health fund or government authority) exceeds the relevant threshold. The tax offset is 20% of the amount by which the net medical expenses exceeds relevant threshold. Medical expenses are defined in subsection 159P(4) of the ITAA 1936 to include a payment 'for therapeutic treatment administered by direction of a legally qualified medical practitioner' (paragraph (d) of the definition). Therapeutic treatment as a concept is concerned with healing or curing, rather than preventing the need for therapy (Case T67 (1968) 18 TRBD 346; (1967) 14 CTBR (NS) Case 31). 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; (1984) 27 CTBR (NS) Case 148). The therapeutic treatment must be administered by direction of a legally qualified medical practitioner. In your case, a legally qualified medical practitioner referred you to a specific naturopath and is monitoring both, your progress and the medication prescribed by your naturopath. You purchased the prescribed herbal medications from a health food store, chemists and green grocers. The fact that the required herbal medication is purchased from a health food store or green grocers does not affect the chemical composition or physiological effects of the medication. The source of therapeutic treatment is not usually relevant in the determination of whether the purpose of a treatment is to heal, cure or manage an illness or disease. The herbal medication is therapeutic. Even though it was prescribed by a naturopath, it was prescribed after consultation and with the agreement of your doctor. Accordingly, the cost of treatment by a naturopath and the herbal medication prescribed satisfies the definition of medical expenses and qualifies as medical expenses for the purpose of the medical expenses tax offset.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. If you have any concerns about this ruling you wish to discuss, you will find our contact details in the fact sheet. | Relevant facts: You are a resident for tax purposes. | Your doctor referred you to a specific naturopath for treatment of a medical condition. | Your doctor regularly monitors your progress and is advised of all herbal medicines prescribed by your naturopath. | You purchase your herbal medications from chemists, health food stores and other food stores including green grocers.