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

Ruling: Q1: Do the school term fees you pay qualify as eligible medical expenses for the purposes of the medical expenses tax offset? | A1: No

Relevant facts and circumstances: You are an Australian resident for tax purposes. You have a dependent child who has been diagnosed with various medical conditions. You were made aware of a particular school by your child's physiotherapist. This school caters for children who have special learning needs. You submitted an application and your child met the eligibility criteria and was accepted into the school. Features of the school program include: • Intensive, individualised small group instruction in literacy and numeracy by specialist teachers; • Instructional principles soundly based on research; • Close monitoring of student progress; • Program adjustment based on progress ensuring a truly individualised program; • Parent education in helping the student at home. The aim of the program is to develop each child to maximum potential in both academic and classroom self-management skills. The schools staff includes special educators (Masters and PHD's), teacher's assistants, a speech pathologist and researcher, backed by technical and administrative support staff. You pay the school fees per term and the invoices you receive are not itemised.

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 now depends on your level of income as the rebate is now income tested. This not only affects the threshold amount but also the percentage of the rebate you can claim. It should also be noted that the threshold amount is subject to indexation and will change in future income years. It should also be noted that the entitlement to a medical expenses tax offset is also being phased out and depending upon what eligible claims are being made an offset may be unavailable from as early as the 2013-14 financial year. Therapeutic treatment Subsection 159P(4) of the ITAA 1936 defines medical expenses which are eligible for the medical expenses tax offset. The only paragraph which may have application to your circumstances is paragraph (d) of the definition of medical expenses in subsection 159P(4) of the ITAA 1936 which includes payments made for therapeutic treatment administered by direction of a legally qualified medical practitioner. The general concept of therapeutic treatment is concerned with healing or curing, rather than preventing the need for therapy. Therapeutic treatment involves the exercise of professional skill in the medical field in a way which normally involves the person administering the treatment using drugs or physical or mental processes of one kind or another for the purpose of curing or managing the disease or ailment It was held in Case A53 69 ATC 313; 15 CTBR (NS) Case 30 that the mere suggestion or recommendation by a medical practitioner that the patient undergoes therapeutic treatment is not sufficient for the payment to qualify as medical expenses. The patient would have to be referred by a medical practitioner to a particular person for specific treatment. Although the treatment must be administered by direction of a legally qualified medical practitioner, the treatment need not be administered by such a practitioner. In your case, your child attends a school which is a centre for research and teaching in special education which caters for students who have special learning needs due to their disabilities. Even though the school has a speech pathologist this does not alter the fact that the fees you pay are for education. Therefore, your child's school fees do not qualify as medical expense for the purposes of the medical expenses tax offset under section 159P of the ITAA 1936.