Private ruling: Medical expenses tax offset
Published: June 2012
Ruling period: Year ended 30 June 2012 | Year ended 30 June 2013
Date scheme commenced: 01 July 2011

Ruling: Q1: Can the cost of treatment that form part of your child's treatment, be included in the calculation of a medical expenses tax offset? | A1: Yes

Relevant facts and circumstances: You and your child are Australian residents for income tax purposes. Your child has been diagnosed with a form of a disability and is receiving treatment at a specialised clinic. Your child was assessed by a paediatrician at the clinic and placed on a program to improve their learning skills. This involved a self paced program and a personalised service. You have incurred expenses associated with this treatment. There is no reimbursement for these expenses from either Medicare or your private health provider.

Relevant legislative provisions: Income Tax Assessment Act 1936 subsection 159P(1) | 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 a government or public authority or a society, association or fund. For the 2012 income year, the medical expenses tax offset is 20% of the amount by which the net medical expenses exceed $2,120. For the 2013 income year, there are proposed changes to the way the medical expenses tax offset is calculated. This may have an effect on how eligibility of a taxpayer to the offset is calculated, the threshold amount and the percentage that is claimable. Medical expenses are defined in subsection 159P(4) of the ITAA 1936 to include payments to a legally qualified medical practitioner, nurse or chemist, or a public or private hospital, in respect of an illness or operation or payments for therapeutic treatment provided the treatment is administered at the direction of a legally qualified medical practitioner. Therapeutic treatment as a concept is concerned with healing or curing, rather than preventing the need for therapy. Therapeutic treatment involves the exercise of professional skill in the medical field in a way that 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. In Taxation Ruling IT 2359 paragraph 5, the term illness includes any condition marked by a pronounced deviation from the normal healthy state, and includes any disorder of the body, function or systems. Your child has an accepted illness. In your case, your child has been diagnosed with an illness. The child is receiving therapeutic treatment for this illness under the direction of a medical practitioner and you have incurred expenses for this treatment that is not reimbursed by Medicare or your private health fund. Consequently the expenses you pay for treatment are considered to be eligible medical expenses and they can be included in a calculation of net medical expenses in the year they are paid.

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