Private ruling: Tax offset - medical expenses - dental implants
Published: September 2014
Ruling period: Year ended 30 June 2014
Date scheme commenced: 1 July 2014

Ruling: Q1: Are dental implants and their attached crowns considered to be a disability aid for the purposes of the medical expenses tax offset? | A1: No.

Relevant facts and circumstances: You are an Australian resident for tax purposes. Your dentist advised you to have a dental implantation procedure. You have out-of pocket medical expenses in relation to your dental implant procedures. You have not received the net medical expenses tax offset in your 2012-13 income tax assessment.

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

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 you have not received an amount of the NMETO in your 2012-13 income tax assessment so you are limited to claims relating to disability aids, attendant care or aged care only. Disability aids Based on your circumstances paragraph 159(1B)(a) of the ITAA 1936 would be the only provision where your expenses can be considered. This paragraph states:- 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 an aid for a person with a disability. Whether dental procedures are considered to be a disability aid is considered by the explanatory memorandum to the Tax and Superannuation Laws Amendment (2014 Measures No.1) Bill 2014. Schedule 3 to this bill amends the ITAA 1936 to phase-out the NMETO and provides this example:- When completing his tax return for the 2014-15 income year Ross determines that he is unable to claim the NMETO for that year because he did not receive an amount of the NMETO in the 2013-14 income year (as his expenses were under the relevant thresholds for that year) and because his medical expenses for the 2014-15 income year were for major dental work and not related to disability aids, attendant care or aged care. In your case, you have out-of-pocket expenses in relation to your dental procedures. Dental work is not considered to be a disability aid for the purposes of the medical expense tax offset. Accordingly, you are not entitled to include your out-of-pocket costs for the dental procedures in your calculation of the medical expenses tax offset.