Private ruling: Medical expenses tax offset
Published: February 2013
Ruling period: Year ended 30 June 2012
Date scheme commenced: 1 July 2011

Ruling: Q1: Can the cost of a bed be included as a medical expense for the purpose of calculating the medical expenses tax offset? | A1: No.

Relevant facts and circumstances: You purchased a bed with adjustable upper and lower segments. You made the purchase on the advice of your doctor.

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

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 or a private health fund. The term 'medical expenses' is defined in subsection 159P(4) of the ITAA 1936 to include payments in respect of a medical or surgical appliance prescribed by a legally qualified medical practitioner, and for therapeutic treatment which has been administered by direction of a legally qualified medical practitioner. Taxation Ruling TR 93/34 explains the meaning of a 'medical or surgical appliance' as 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. TR 93/34 also provides that generally, a household or commercial appliance is not a 'medical or surgical appliance'. Paragraph 4 of TR 93/34 states that an appliance is an aid to function or capacity if it helps the person with the disability or illness, perform the activities of daily living. The definition requires looking to the character of the appliance, not the purpose for which it is prescribed or used. It is not sufficient that a medical practitioner prescribes an appliance for medical or surgical ends. An item that merely has a therapeutic purpose, such as relieving, healing or preventing a medical condition, is not considered to be a medical or surgical appliance (paragraph 7 of TR 93/34). Paragraph 8 of TR 93/34 includes the following among the examples of a 'medical or surgical appliance': bath seats used by invalids or aged persons, car controls for the disabled, crutches, hearing aids, kidney dialysis machines and oxygen equipment. While the list is not exhaustive and does not include all items which qualify as a 'medical or surgical appliance', it gives guidance as to the types of items which qualify. The bed you have bought is intended to help you with your medical condition. While this may assist you by providing greater comfort during the day, the bed is not considered to assist you in performing the activities of daily living. The fact that the bed may relieve, heal or prevent a medical condition does not make it a 'medical or surgical appliance'. A bed is a household appliance and while it is acknowledged that the bed has a specific purpose to aid in helping your medical condition, generally a household appliance is not a 'medical or surgical appliance'. The bed is also not similar in nature to any of the examples listed in TR 93/34. Therefore the bed is not considered to be a medical expense as defined in subsection 159P(4) of the ITAA 1936. Payments in respect of therapeutic treatment which has been administered by direction of a legally qualified medical practitioner can qualify as medical expenses. The term therapeutic treatment contemplates that the treatment administered by the medical practitioner is directed toward the cure of the ill patient or management of the patient's illness. The cost of acquiring the bed is not a payment for therapeutic treatment administered by direction of a legally qualified medical practitioner. Accordingly, the cost of the bed is not a medical expense as defined in subsection 159P(4) of the ITAA 1936. Therefore you cannot include the cost of the bed as a medical expense when calculating the medical expenses tax offset under section 159P of the ITAA 1936.