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

Ruling: Q1: Can you include the net cost of surgery relating to a disability aid in a calculation for a medical expenses tax offset (METO)? | A1: Yes.


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

Reasons for decision: Summary: A medical expenses tax offset is available to a taxpayer under sub-section 159P(1) of the Income Tax Assessment Act 1936 (ITAA 1936) where the taxpayer pays medical expenses in an income year for themselves 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 term 'medical expenses' is defined in sub-section 159P(4) of the ITAA 1936. On 14 May 2013, the government announced in the 2013-14 Budget that it will phase out the net METO. From 1 July 2013, those taxpayers who received the offset in their 2012-13 income tax assessment will continue to be eligible for the offset for the 2013-14 income year if they have eligible out-of-pocket medical expenses above the relevant claim threshold. Similarly, those who receive the tax offset in their 2013-14 income tax assessment will continue to be eligible for the offset in 2014-15. Where an offset is not received for the 2012-13 financial year expenses which may be eligible are limited. For the 2013-14 to 2018-19 financial years, an amount that would otherwise be paid as medical expenses is treated as not being paid as medical expenses unless the payment, among other things, relates to an aid for a person with a disability. In your case, you are undergoing surgery. It is accepted that the prosthetic is a disability aid and that the surgery relates to an aid for a person with a disability. Therefore, you can include the expenses relating to the surgery as eligible expenses for the purpose of claiming the METO.

Relevant facts: You did not claim a medical expenses tax offset for the 2012-13 financial year. | You have undergone surgery to fit an implant which allows a prosthetic to be attached.