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

Ruling: Q1: Do the costs of your surgery qualify as eligible medical expenses for the purposes of the medical expenses tax offset? | A1: Yes.

Relevant facts and circumstances: You are a single person with an adjusted taxable income below $84,000 for the 2013 financial year. Your General Practitioner advised that you undergo surgery to reduce your back pain and as a means of preventing any further back problems. You had the surgery which cost you $X. A portion of the total expense was refunded to you from Medicare.

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 section 159P of the Income Tax Assessment Act 1936 (ITAA 1936) where the taxpayer incurs medical expenses in an income year for themselves or a dependant who is an Australian resident. The medical expenses tax offset is 20% of the amount by which the net medical expenses exceed $2,120 for the 2012-13 income year. Net medical expenses are the medical expenses a taxpayer has paid less any refunds they received, or could have received, from Medicare or a private health fund. Payments to legally qualified medical practitioners, nurses or chemists in respect of an illness or an operation qualify as rebatable medical expenses. However, from the 2005/06 year, payments for solely cosmetic operations for which no Medicare benefit is payable are ineligible. To determine whether a procedure is cosmetic in nature, the ordinary definition of cosmetic applies. The Macquarie dictionary defines cosmetic as: · serving to beautify, imparting or improving beauty, especially of the complexion; or · designed to effect a superficial alteration while keeping the basis unchanged. To determine if an expense is an ineligible medical expense for medical expenses tax offset purposes two factors have to be considered: · is the procedure cosmetic in nature according to the ordinary definition of cosmetic; and · if the procedure is cosmetic, is a Medicare benefit payable? In your case, you have had surgery to reduce your back pain and prevent further problems from occurring. It is considered, that whilst the surgery may have had some cosmetic effect, the primary reason was to alleviate prolonged and intense back pain. Accordingly, you are entitled to include the costs of the surgery in the calculation of your medical expenses tax offset.