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

Ruling: Question and answer | Do the costs associated with the conversion of a motor vehicle to carry a disability aid qualify as medical expenses for the purposes of the net medical expenses offset? | No.

Relevant facts and circumstances: You are dependant on a disability aid. You are the registered owner of a vehicle which you had converted to enable your disability aid to be transported. The transport of the disability aid enables you to participate in daily living such as grocery shopping, medical appointments, work related seminars, clothes shopping etc.

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. For the 2011-12 income year, the amount of the tax offset is calculated as 20% of the excess of net medical expenses over the threshold of $2,060. The term 'medical expenses' is defined in paragraph 159P(4)(f) of the ITAA 1936 to include payments in respect of a medical or surgical appliance prescribed by a legally qualified medical practitioner. Taxation Ruling TR 93/34 Income tax: medical expense rebate - meaning of medical or surgical appliance (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. 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. To be a medical or surgical appliance an item must be manufactured as, distributed as, or generally recognised to be an aid to a person's function or capacity. Paragraph 8 of TR 93/34 includes the following among the examples of a 'medical or surgical appliance': car controls for the disabled, crutches, invalid chairs and wheel chairs. 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. In Case D37 72 ATC 210; Case 7 (1972) 18 CTBR (NS) 33 ( Case D37 ), the taxpayer installed a chair lift to enable his paralysed wife to move from floor to floor in their two storey house. The Board of Review held that the lift was a medical or surgical appliance, finding that: ... it can be said that the lift was specifically designed to replace or alleviate an absent or impaired bodily function or medical defect and the use of which, in the commercial sense, is limited in normal circumstances to such replacement or alleviation...In appearance and function the chair lift in the instant case may be equated to an invalid chair which is normally designed to enable the patient to travel in a horizontal plane. Here the chair was specifically designed for the vertical... hand control system. The car itself is not a medical or surgical appliance. A motor vehicle modified or otherwise, is a means of private transport and it retains its character as a passenger vehicle. It is not an item which is specifically manufactured, distributed or generally recognised for use by a person with a disability or illness. In your case, the motor vehicle conversion costs are not considered to meet the criteria of eligible medical expenses. Although these modifications are necessary to allow you to transport your disability aid in the motor vehicle, they are not payments made in respect of a medical or surgical appliance. They are modifications to a motor vehicle; which, is not considered to be a medical or surgical appliance. Therefore the costs associated with the conversion of your motor vehicle are not considered to be medical expenses and are not eligible for the medical expenses offset.