Private ruling: Medical expenses tax offset
Published: December 2013
Ruling period: Year ended 30 June 2014
Date scheme commenced: 1 July 2013

Ruling: Q1: Do your medicall costs qualify as an eligible medical expense for medical expenses tax offset purposes? | A1: Yes.

Relevant facts and circumstances: You are an Australian resident for taxation purposes. You suffer from a medical condition and will have extensive medical procedures carried out in order for you to be able to eat, as well as to alleviate the general health problems caused by your medical condition. The procedures are not cosmetic in nature.

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

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 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. The amount of net medical expenses tax offset you can claim will now depend on your level of income. You will be able to claim an offset of 10% of your net medical expenses over the relevant threshold if you have an adjusted taxable income (ATI) above certain thresholds. Currently the thresholds are: · $84,000 if you are single, or · $168,000 if you are a couple or family The family threshold will increase by an amount for each dependent child after the first. If your ATI is below these income thresholds, you are not affected by this change and can continue to claim an offset of 20% of your net medical expenses over the relevant threshold amount. Payments to a legally qualified medical practitioner or a public or private hospital for your procedure falls within the definition of medical expenses in sub-section 159P(4) of the ITAA 1936 as being in respect of an illness or an operation. In your case, you were diagnosed with a condition. Your legally qualified practitioner specialises in treatment for your condition. As part of the treatment you will undergo surgery. Accordingly, the out of pocket expenses you will pay to the practitioner are considered eligible medical expenses and you are entitled to include the net costs in the calculation of the medical expenses tax offset.