Private ruling: Medical expenses
Published: June 2013
Ruling period: Year ending 30 June 2013 | Year ending 30 June 2014 | Year ending 30 June 2015 | Year ending 30 June 2016
Date scheme commenced: 1 July 2012

Ruling: Q1: Are the expenses relating to physiotherapy, swimming and horse riding, medical expenses for the purposes of the medical expenses tax offset? | A1: Yes | Q2: Are the expenses of special equipment needs, medical expenses for the purposes of the medical expenses tax offset? | A2: Yes | Q3: Are the expenses of special modifications to the family's motor vehicle, medical expenses for the purposes of the medical expenses tax offset? | A3: No


Relevant legislative provisions: Income Tax Assessment Act 1936 Section 159P | Income Tax Assessment Act 1936 Subsection 159P(3A) | Income Tax Assessment Act 1936 Subsection 159P(4)

Reasons for decision: Summary: A medical expenses tax offset is available to a taxpayer under subsection 159P(1) of the Income Tax Assessment Act 1936 (ITAA 1936) where the taxpayer pays medical expenses in an income year for themselves or a dependant who is an Australian resident, to the extent that they are not reimbursed, or are eligible to be reimbursed, from Medicare and private health insurers. The medical expenses tax offset is 20% of the amount by which the net medical expenses exceed the threshold. Please note that the threshold amount is subject to indexation and from the relevant financial year is also subject to income testing and this will change the threshold in future years. | Detailed Reasoning - Therapeutic Treatment: Under paragraph 159P(4)(d) of the ITAA 1936, the definition of medical expenses includes payments made 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 a disease or ailment. Although the treatment must be administered by direction of a legally qualified medical practitioner, the treatment need not be administered by such a practitioner. In your case, the physiotherapy, swimming and horse riding are considered to be therapeutic treatment, as they involve the exercise of professional skill in a manner that is directed towards the management of your child's medical condition and your child has been referred to these specialist activities by a legally qualified medical practitioner. | Detailed Reasoning - Medical or surgical appliance: Under paragraph 159P(4)(f) of the ITAA 1936, the definition of medical expenses includes payments in respect of medical or surgical appliances which have been prescribed by a legally qualified medical practitioner. Taxation Ruling TR 93/34 provides the Commissioner's view on what constitutes a medical or surgical appliance and provides that: · A medical or surgical appliance is an instrument, apparatus or device which is manufactured as, distributed as or generally recognised to be an aid to the function or capacity of a person with a disability or illness. · An item is an aid to the function or capacity of a person if it helps the person to perform activities of daily living. · Generally, a household or commercial appliance is not a medical or surgical appliance. · The character of the item rather than the purpose for which the item is prescribed or used determines whether the item is a medical or surgical appliance. In your case, you have previously purchased specialised equipment such as special seating mobility frames, but you will have to purchase new seating and equipment in the future as your child's needs change as they get older. You have also stated that you are installing fixed railings in your bathrooms and toilets to assist your child in those rooms. These railings are generally recognised as being an aid to the function of a person with a physical disability. Accordingly, it is considered that the specialised equipment, bathroom and toilet railings and the seating mobility frames are medical or surgical appliances as defined in paragraph 159P(4)(f) of the ITAA 1936. This specialised equipment and railings have been prescribed by your child's doctor. As the appliances were prescribed by a legally qualified medical practitioner, their costs can be included as a medical expense for the purposes of the medical expenses tax offset. | Detailed Reasoning - Costs of modifying the front seat of your vehicle: ATO Interpretive Decision ATO ID 2010/47 considered a case where a taxpayer incurred a number of expenses to modify their vehicle to enable a fold down ramp to be installed. The taxpayer's spouse suffered from a physical disability and the taxpayer's doctor recommended the modifications to the vehicle to allow the taxpayer's spouse to be able to access the vehicle. The required modifications included: · cutting and lowering the floor of vehicle to enable the installation of the wheelchair ramp; · modifying the suspension to cater for the new configuration; · moving and modifying the petrol tank; · seating variations; · installing special locking plates to lock the wheelchair in position; · installing seat belts; and · laying new carpet to cater for new configuration In this case it was determined that the modifications above did not replace or alleviate an absent or impaired bodily function or medical defect. They related to either reconfiguring aspects of the vehicle in preparation for the installation of medical or surgical appliances, or meeting safety requirements. The modifications did not qualify as medical or surgical appliances themselves under paragraph 159P(4)(f) of the ITAA 1936. In your case, you are looking at buying a new family car and having the front seat modified so it can swivel in and out to make easy access for their child. This modification relates to either reconfiguring the car in preparation for having the front seat modified, or meeting normal safety requirements. This modification as stated above does not qualify directly as a medical or surgical appliance under paragraph 159P(4)(f) of the ITAA 1936. Consequently, expenses incurred on having the front seat in a family car modified do not qualify as eligible medical expenses for the purposes of the medical expenses tax offset.

Relevant facts: You have a child who has been diagnosed with a medical condition. | Your child's doctor has prescribed as medical treatment the following; | · Modifications to the family car | · Ongoing physiotherapy, occupational therapy (horse riding and swimming lessons) | You are a looking at buying a new family car and having the front seat modified so it can swivel in and out to make easy access for your child. | You have previously installed portable railings in the toilets and bathrooms that are removable. You are looking at installing fixed railings in these areas. | You have provided a copy of a letter from your child's doctor.