Private ruling: Medical expense tax offset
Published: November 2014
Ruling period: Year ending 30 June 2015 | Year ending 30 June 2016 | Year ending 30 June 2017 | Year ending 30 June 2018 Year ending 30 June 2019
Date scheme commenced: 1 July 2014

Ruling: Q1: Do the payments you make to the centre qualify as eligible medical expenses for the purposes of the medical expenses tax offset? | A1: No.

Relevant facts and circumstances: You and your dependants are Australian residents for tax purposes. You have a dependent child who has been diagnosed with a disability. Your child's legally qualified medical practitioner and paediatrician have referred your child for behavioural intervention. Whilst at the centre, your child is provided with personal care if required. You have out-of-pocket expenses in relation to the fees you pay. Neither you nor your spouse have received the net medical expenses tax offset in your 2012-13 income tax assessments.

Relevant legislative provisions: Income Tax Assessment Act 1936 Section 159P | Income Tax Assessment Act 1936 Subsection 159P(1) | Income Tax Assessment Act 1936 Paragraph 159P(1B)(b)

Reasons for decision: Summary: A medical expenses tax offset is available under subsection 159P(1) of the Income Tax Assessment Act 1936 (ITAA 1936) where the taxpayer pays eligible medical expenses in an income year for themselves or a dependant who is an Australian resident. The medical expenses tax offset is only available if the amount of medical expenses, after being reduced by any entitlement to reimbursement from a health fund or government authority such as Medicare, exceeds the threshold amount. This tax offset is income tested. The percentage of net medical expenses you can claim and the threshold amount is determined by your adjusted taxable income (ATI) and family status. It should also be noted that the threshold amount is subject to indexation and will change in future income years. The net medical expenses tax offset (NMETO) is being phased out between the 2013-14 and 2018-19 financial years and eligibility for this offset has changed. Transitional arrangements will allow taxpayers to claim the offset from the 2013-14 income year until the end of the 2018-19 income year, but only for those medical expenses relating to disability aids, attendant care or aged care. In addition, for the 2013-14 and 2014-15 income years, taxpayers will be eligible to claim the full range of medical expenses (as defined currently) but only if they have received an amount of the net medical expenses tax offset in the previous income year (or in both 2012-13 and 2013-14 in respect to claims in the 2014-15 income year). In your case, neither you nor your spouse have received an amount of the NMETO in your 2012-13 income tax assessments so you are limited to claims relating to disability aids, attendant care or aged care only. Attendant care For the 2013-14 to 2018-19 years of income, an amount that would otherwise be paid as medical expenses is treated as not being paid as medical expenses unless the payment relates to services rendered by a person as an attendant of a person with a disability (paragraph 159(1B)(b) of the ITAA 1936). Attendant care services provide assistance with everyday tasks and include, for example, personal assistance, home nursing, home maintenance and domestic services. Your child has a disability and receives therapy through a centre. Even though your child is provided with personal care whilst in the care of the centre's staff, the personal care is considered to be incidental to the therapy that they receive through the program. The payments you make to the centre are primarily for therapeutic treatment as opposed to attendant care. It is considered that the fees paid to the centre do not fall under payments that relate to services rendered by a person as an attendant of a person with a disability and are not an eligible medical expense. Therefore, you are not entitled to include your out-of-pocket expenses in relation to the therapy in the calculation of the NMETO.