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Edited version of private ruling

Authorisation Number: 1011510709886

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Ruling

Subject: Medical expenses

Question 1

Does the treatment you received qualify as medical expenses for the purposes of calculating a medical expenses tax offset?

Answer

Yes.

Question 2

Do the accommodation and living expenses qualify as medical expenses for the purposes of calculating a medical expenses tax offset?

Answer

No.

This ruling applies for the following period

Year ended 30 June 2010

The scheme commenced on

1 July 2009

Relevant facts and circumstances

You are an Australian resident.

You have been trying to overcome an illness for a number of years.

After many hospitalisations at public hospitals your doctor referred you to a specialised private treatment facility.

You have provided a receipt for the full cost of the treatment. This amount was the full cost of your in-residence program.

You can provide documentation from your general practitioner confirming the referral.

You were under the care of a medical practitioner during the initial stages of your stay at the facility.

You attended all of the mandatory counselling sessions at the facility.

You were not allowed to leave the facility during the period of rehabilitation.

Relevant legislative provisions

Income Tax Assessment Act 1936 Section 159P.

Income Tax Assessment Act 1936 Subsection 159P(4).

Reasons for decision

Medical expenses tax offset

A medical expenses tax offset is available to a taxpayer under section 159P of the Income Tax Assessment Act 1936 (ITAA 1936), where the taxpayer pays medical expenses for themselves or a dependant who is an Australian resident. For the 2009-10 income year, the medical expenses tax offset is available if the amount of medical expenses (reduced by any entitlement to reimbursement from a health fund or government authority) exceeds $1,500. The maximum tax offset is 20% of the amount by which the net medical expense exceeds $1,500.

The term medical expenses is defined in subsection 159P(4) of the ITAA 1936. It covers payments to doctors, nurses, chemists, dentists and optometrists. It also includes payments for therapeutic treatment administered by the direction of a legally qualified medical practitioner.

Therapeutic treatment

Therapeutic treatment involves the exercise of professional skill in the medical field. This would normally involve 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 (Case R95 84 ATC 633;  27 CTBR (NS) Case 48).

The therapeutic treatment must be administered by direction of a legally qualified medical practitioner. In Case A53 69 ATC 313, it was held:

However a mere suggestion or recommendation by a doctor to a patient that the patient undergo therapeutic treatment is not enough for the associated expenses to qualify as medical expenses. The patient must be referred to a particular person for the therapeutic treatment.

You were referred to the facility by your general practitioner. Your treatment while you were at the facility was under the direction of a qualified medical practitioner for the initial period of the treatment. Ongoing regular counselling was a requirement of your rehabilitation. You do not have an itemised account of the services provided to you by the medical practitioner. All expenses were included in the full cost of the program.

The Commissioner accepts that your treatment at the facility which involved the exercise of professional skill in the medical field and were specifically for the purpose of curing or managing your illness qualify as therapeutic treatment for the purposes of subsection 159P(4) of the ITAA 1936. However your accommodation and living expenses are not considered to be medical expenses and should not be included in your medical expenses for the tax offset.

Therefore, you will need to make an apportionment of the total paid to determine the amount that relates to the therapeutic treatment sessions. That is, you will need to exclude the portion that relates to non-medical expenses such as accommodation and meals.

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