Private ruling: Medical expenses tax offset
Published: June 2014
Ruling period: Year ended 30 June 2012 | Year ended 30 June 2013 | Year ended 30 June 2014 | Year ended 30 June 2015 | Year ended 30 June 2016
Date scheme commenced: 1 July 2011

Ruling: Q1: Are your costs considered to be medical expenses for the purpose of claiming a medical expenses tax offset? | A1: No.


Relevant legislative provisions: Income Tax Assessment Act 1936 Subsection 159P(1) | Income Tax Assessment Act 1936 Subsection 159P(4) | Income Tax Assessment Act 1936 Paragraph 159P(4)(f)

Reasons for decision: Summary: A medical expenses tax offset (METO) is available under section 159P of the Income Tax Assessment Act 1936 (ITAA 1936), where you pay medical expenses in an income year for yourself and/or a dependant who is an Australian resident. 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 (paragraph (a) of the definition). 'Ineligible 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 a cosmetic operation that is not a professional service for which a Medicare benefit is payable under Part II of the Health Insurance Act 1973 that is solely cosmetic. In your case, the treatment undertaken has not been provided by a legally qualified medical practitioner. Therefore, the cost the treatment does not constitute a medical expense as defined in subsection 159P(4) of the ITAA 1936. | Detailed Reasoning - Surgery: In determining whether an operation is 'cosmetic' the Commissioner must consider the ordinary meaning of the word (paragraph 4.18 of the Explanatory Memorandum to the Tax Laws Amendment (2005 Measures No 6) Bill 2005 (the EM)). Paragraph 4.19 of the EM refers to the following definition of cosmetic in The Macquarie Dictionary: • serving to beautify; imparting or improving beauty, especially of the complexion; or • designed to effect superficial alteration while keeping the basis unchanged. In order for this definition of cosmetic to be satisfied, it is sufficient that either part of the definition is met. In relation to the second part of the above definition, it is argued that the operation is merely superficial and does not change the basis. Unlike reconstructive surgery to remedy a loss, this surgery merely augments your existing body parts. As the operation was designed to effect a superficial alteration whilst keeping the basis unchanged, it is cosmetic. In view of the above, the operation is a cosmetic operation with no Medicare benefit payable under Part II of the Health Insurance Act 1973 and thus the expenses are ineligible medical expenses for the purposes of subsection 159P(4) of the ITAA 1936.

Relevant facts: You have a chronic illness. | You have undergone surgery and have also incurred expenses for treatment which was not performed by a legally qualified practitioner. | You are scheduled for further surgery. | None of the expenses are payable in relation to a professional service for which a Medicare benefit is payable.