Private ruling: eligibility for medical expenses tax offset
Published: March 2012
Ruling period: Year ended 30 June 2011
Date scheme commenced: 01 July 2010

Ruling: Q1: Can the cost of the nappies you purchase from a chemist for your child's use be included in the calculation of a medical expenses tax offset? | A1: Yes.

Relevant facts and circumstances: Your child suffers from the medical condition and has several disorders including incontinence. A letter from the child's doctor confirms the medical condition and because of the medical condition your child has to wear nappies. You purchase special medical nappies. They are an all-in-one incontinence brief designed for use by older children and they meet the specific needs of your child. You purchase these nappies by special order from a chemist.

Relevant legislative provisions: Income Tax Assessment Act 1936 Section 159P

Reasons for decision: Summary: A medical expenses tax offset is available under section 159P of the Income Tax Assessment Act 1936 (ITAA 1936), where you incur medical expenses in an income year for yourself 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. The medical expenses tax offset is 20% of the amount by which the net medical expenses exceed $2,000 for the 2010-11 financial year. Medical expenses are defined in subsection 159P(4) of the ITAA 1936 and paragraph 159P(4)(a) includes payments made to a legally qualified medical practitioner, nurse or chemist, or a public or private hospital, in respect of an illness or operation. The meaning of the term illness was discussed by Taxation Board of Review No.3 in Case Q21 , 83 ATC 77: Case 85 26 CTBR (NS) 570. Dr Gerber (Member) stated that the term includes any condition marked by a pronounced deviation from the normal healthy state. Paragraph 6 of Taxation Ruling IT 2146 states that claims should be accepted where the taxpayer has provided evidence from a legally qualified medical practitioner that the expenditure is in respect of an illness and that the product was purchased from a chemist. In your case, your child's doctor confirmed your child's medical condition and the need for the use of special medical nappies. You purchase these nappies from a chemist; therefore the expense you have incurred on nappies qualifies as an eligible medical expense, for the purpose of calculating your medical expenses tax offset.

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