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Ruling

Subject: Medical expenses tax offset

Can the cost of treatment for your dependant's disorder be included as a medical expense for the purpose of calculating a medical expenses tax offset?

Yes.

Relevant facts

Your dependant was referred to a specific person at a treatment centre by his paediatrician for the treatment of a disorder.

Your dependant was referred to the paediatrician by the family doctor.

The paediatrician has specific knowledge of the programs offered by the centre, and after the initial assessment undertaken by the specific person at the treatment centre, he participated with her to decide on the specific course of treatment.

The paediatrician receives results of assessments from the centre, and he is seen by your dependant every six to eight weeks. The paediatrician assesses the progress and condition of the patient and then has communication with the treatment provider, and collaborates with her to decide on further courses of action and treatment.

The family doctor also received updates from the paediatrician as to progress and results in the program.

You think that your dependant's involvement in the program may be for approximately one year.

The medical expenses for the treatment exceeded $1,500 for the 2009-2010 year.

Reasons for decision

Summary

As the expenses were incurred in respect of an illness, and were made for therapeutic treatment at the direction of a legally qualified medical practitioner, they qualify for inclusion in the calculation of the medical expenses tax offset.

Detailed reasoning

A medical expenses tax offset is available to a taxpayer under subsection 159P(1) of the Income Tax Assessment Act 1936 (ITAA 1936) where the taxpayer incurs 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 definition of a dependant for the purposes of this subsection is provided in subsection 159P(4) of ITAA 1936 and includes a child of the taxpayer less than 21 years of age. Your son falls within the definition of dependant under subsection 159P(4) of the ITAA 1936.

The medical expenses tax offset is 20% of the amount by which the net medical expenses exceed $1,500 for the income year.

The term 'medical expenses' is defined in subsection 159P(4) of the ITAA 1936, and includes such payments made for therapeutic treatment administered by direction of a legally qualified medical practitioner.

In Case R95 84 ATC 633; 27 CTBR (NS) Case 148, the Tribunal found that 'therapeutic treatment' necessitated the exercise of professional skill in the medical field in some positive way, which would normally involve the person undertaking the act of administering the treatment using chemical agents or drugs or a physical or mental process of one kind or another in a manner that is directed towards the cure or management of disease or of diseased patients.

Therapeutic treatment is administered by direction of a legally qualified medical practitioner when the treatment is undergone as part of the medical practitioner's care of the patient.

Furthermore, therapeutic treatment as a concept is concerned with healing or curing, rather than preventing the need for therapy (18 TBRD Case T67; 14 CTBR (NS) Case 31). Although the treatment must be administered by direction of a legally qualified medical practitioner, the treatment need not be administered by such a practitioner.

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 (Case A53 69 ATC 313; 15 CTBR (NS) Case 30).

In your case, your dependant has a disorder. He was referred to a specific person at a treatment centre.

The paediatrician receives results of assessments from the centre, and he is seen by the patient every six to eight weeks. He assesses the progress and condition of the patient and then has communication with the specific person at the treatment centre, and collaborates with her to decide on further courses of action and treatment.

Therefore, the programs are therapeutic treatment administered by a legally qualified medical practitioner and payments for this treatment are eligible for the medical expenses tax offset under section 159P of the ITAA 1936.

If the net medical expenses you incurred exceeded $1,500, you are entitled to claim the medical expenses tax offset under section 159P of the ITAA 1936.

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