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  • Medical expenses

    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:

    • received this offset in your 2012–13 income tax assessment, or
    • paid for medical expenses relating to disability aids, attendant care or aged care.
    Attention

    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).

    End of attention

    Example

    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.

    End of example

    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.

    End of work it out

    Use the table below to work out whether you can claim this tax offset.

    Table: Entitlement to net medical expenses tax offset

    Family status

    ATI threshold

    What can I claim?

    Single

    (single at 30 June 2014 and no dependent children)

    $88,000 or less

    20% of net medical expenses over $2,162

    above $88,000

    10% of net medical expenses over $5,100

    Family

    (with a spouse at 30 June 2014, or dependent children at any time during the year, or both)

    $176,000* or less

    20% of net medical expenses over $2,162

    above $176,000*

    10% of net medical expenses over $5,100

    * 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 
    • your spouse, regardless of their income
    • your children who were under 21 years old, including adopted and stepchildren, regardless of their income
    • any other child under 21 years old who was not a student, whom you maintained, and whose adjusted taxable income (ATI) for the period you maintained them was less than      
      • for the first child under 21 years old      
        • the total of $282 plus $28.92 for each week you maintained them, or
        • $1,786 if you maintained them for the whole year
         
      • for any other child under 21 years old      
        • the total of $282 plus $21.70 for each week you maintained them, or
        • $1,410 if you maintained them for the whole year 
         
       
    • a student under 25 years old whom you maintained and whose ATI was less than      
      • the total of $282 plus $28.92 for each week you maintained them, or
      • $1,786 if you maintained them for the whole year
       
    • a child-housekeeper, but only if you can claim an amount for them as part of your zone or overseas forces tax offset, or could have claimed for them had your ATI or the combined ATI of you and your spouse not exceeded $150,000 
    • an invalid relative, parent or spouse’s parent, but only if you can claim for them as part of your zone or overseas forces tax offset, or could have claimed for them had your ATI or the combined ATI of you and your spouse not exceeded $150,000
    • a dependant (invalid or carer), but only if you can claim a dependent (invalid and carer) tax offset for them, or could have claimed for them had your ATI or the combined ATI of you and your spouse not exceeded $150,000.

    You and your dependants must be Australian residents for tax purposes, but you can include medical expenses paid while travelling overseas.

    Find out more

    End of find out more
    • Last modified: 13 Oct 2014QC 31918