Private ruling: Medical expenses
Date of advice: 24 November 2015
Published: January 2016
Ruling period: Year ended 30 June 2015
Date scheme commenced: 1 July 2014

Ruling: Q1: Are you able to transfer your spouse's eligibility to claim the net medical expenses tax offset (NMETO) for the 2015 financial year to your own tax return? | A1: No.

Relevant facts and circumstances: You are an Australian resident. You and your spouse incurred eligible medical expenses in 2013 and 2014. Your spouse claimed and received the NMETO for your combined medical expenses in their tax return in both the 2013 and the 2014 years. Your spouse passed away in the 20XX financial year. You have incurred general medical expenses in the 20YY financial year that do not relate to disability aids, attendant care or aged care.

Relevant legislative provisions: Income Tax Assessment Act 1936 Subsection 159P(1)

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 dependent 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, your spouse claimed and received the NMETO in his their return in the 2013 and 2014 years for expenses incurred by both of you. Your spouse was therefore the taxpayer who would have been eligible to claim the NMETO in the 2015 year for general eligible medical expenses. Whilst it is acknowledged that the claims in previous years included your own medical expenses, the Commissioner does not have the power to exercise his discretion to allow the transfer of this eligibility to another person for any reason. You did not claim or receive the NMETO in 2013 or 2014 in your tax return and as your medical expenses in the 2015 year do not relate to disability aids, attendant or aged care, it follows that you are not eligible to claim the NMETO in 2015.