Private ruling: Medical expenses tax offset
Published: June 2012
Ruling period: Year ended 30 June 2011
Date scheme commenced: 1 July 2010

Ruling: Q1: Are you entitled to claim the medical expenses offset for surgery? | A1: Yes.

Relevant facts and circumstances: Your spouse under went surgery. This surgery was performed by a legally qualified doctor. You received a Medicare rebate for this surgery.

Relevant legislative provisions: Income Tax Assessment Act 1936 Section 159P. | Income Tax Assessment Act 1936 Subsection 159P(4).

Reasons for decision: Summary: A medical expense tax offset is available to a taxpayer under section 159P of the ITAA 1936, where the taxpayer incurs medical expenses for themselves or a dependant who is an Australian resident. The medical expense tax offset is only available if the amount of medical expenses (reduced by any entitlement to reimbursement from a health fund or government authority) exceeds $1500. The tax offset is 20% of the amount by which the net medical expenses exceeds $1500. Subsection 159P(4) defines 'medical expenses' to include payments to a legally qualified medical practitioner, or a public or private hospital, in respect of an illness or operation. Paragraph 159P(4) of the ITAA 1936 defines 'ineligible medical expenses' as payments to a legally qualified 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 . Taxation Determination TD 94/5 states that where cosmetic surgery is performed by a legally qualified medical practitioner, it falls within the meaning of 'operation' for medical expense purposes. In your case, you have had the surgery performed by a legally qualified medical practitioner. As a Medicare benefit was payable in respect of the surgery, it is not an 'ineligible medical expense'. Therefore, as your net medical expenses exceeded $1500, you are entitled to a medical expense tax offset under section 159P of the ITAA 1936.

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