Private ruling: Net medical expenses tax offset
Date of advice: 11 August 2017
Published: November 2017
Ruling period: Year ending 30 June 2017
Date scheme commenced: 1 July 2016

Ruling: Q1: Are you able to claim the net medical expenses tax offset (NMETO) for building modifications performed to your main residence as disability aids? | A1: No

Relevant facts and circumstances: You are an Australian resident for taxation purposes. You have medical condition and have been approved as a participant under the National Disability Insurance Scheme (NDIS). Due to your medical condition, you required building modifications to your main residence. These building modifications have been paid for by you. NDIS will not reimburse you for these modifications as they have been paid for.

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 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. Disability aids Based on your circumstances paragraph 159P(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. Disability aids are items of property manufactured as, distributed as, or generally recognised to be, an aid to the function or capacity of a person with a disability but, generally will not include ordinary household or commercial appliances. Examples include wheelchairs, walking frames, hearing aids, car controls for the disabled and similar appliances. Although the building modifications are required due to your medical condition, they have a general domestic or household purpose. Building alteration expenses are not considered to be payments for a disability aid. Therefore, the modifications to your main residence are not considered to be medical expenses for section 159P of the ITAA 1936 purposes. Although we acknowledge your medical condition and the hardships you have subsequently endured, the legislation is very specific as to the circumstances under which a taxpayer is entitled to a medical expenses tax offset due to the legislative changes in relation to the phase out of the offset as mentioned above. The Commissioner is bound by the law and does not have the discretion to allow a claim if the expense does not fall within the legislation.