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Income and deductions
Net medical expenses are your total medical expenses minus refunds from Medicare and private health insurers which you, or someone else, received or are entitled to receive.
To be eligible to claim this offset, you must have either:
Having eligible medical expenses in 2012–13 may not be sufficient where other tax offsets have reduced your tax payable to zero as the order they are applied against your tax payable is set out in legislation – see section 63–10 of the Income Tax Assessment Act 1997External Link (ITAA 1997).
David is 66 years old. For the year ended 30 June 2013, David’s taxable income is $30,500. The gross income tax payable on his taxable income is $2,337.00. David has claimed a $500 tax offset for his net medical expenses (NMETO) and is also entitled to receive up to $2,230 through the seniors and pensioners tax offset (SAPTO) and $445 for the low income tax offset (LITO).
In applying the priority order of tax offsets, the following result occurs:
Gross tax on $30,500 is $2,337
Less tax offsets applied in priority order:
Less seniors and pensioner tax offset of $2,230 is $107
Less low income tax offset of $445 $0 ( $338 not applied)
Less Net medical expenses tax offset
No Medicare levy is payable on David’s taxable income.
As a result of the priority order rule, David’s income assessment did not include an amount of NMETO greater than nil – he will not be eligible to claim this tax offset in his 2013–14 income tax return.
If you received this offset in your 2012–13 income tax assessment, there is no change to the types of net medical expenses that you can claim.
If you did not receive this offset in your 2012–13 income tax assessment, you can only claim net medical expenses relating to disability aids, attendant care or aged care.
To be eligible to claim the offset in 2014–15, you need to have received the offset in your 2013–14 income tax assessment. The final year you can claim is 2014–15, unless you have medical expenses relating to disability aids, attendant care or aged care – in this case, you can claim the tax offset for these expenses up to the 2018–19 income tax year.
Note: You will no longer be able to claim for NMETO from 1 July 2019.
This offset is income tested. If you are eligible for the offset, the percentage of net medical expenses you can claim is determined by your adjusted taxable income (ATI) and family status.
Work it out
Work out your adjusted taxable income by using our Income tests calculator.
Use the table below to work out whether you can claim this tax offset.
What can I claim?
(single at 30 June 2014 and no dependent children)
$88,000 or less
20% of net medical expenses over $2,162
10% of net medical expenses over $5,100
(with a spouse at 30 June 2014, or dependent children at any time during the year, or both)
$176,000* or less
* plus $1,500 for each dependent child after the first.
There is no upper limit to the amount you can claim.
The medical expenses must be for:
You and your dependants must be Australian residents for tax purposes, but you can include medical expenses paid while travelling overseas.
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