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Edited version of private ruling
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Ruling
Subject: Medical expenses tax offset
Can you include the costs incurred for chemist scripts, chiropractor and naturopath treatments and medications when calculating the medical expenses tax offset?
Yes.
This ruling applies for the following period
Year ended 30 June 2010
Year ended 30 June 2011
Year ended 30 June 2012
Year ended 30 June 2013
The scheme commenced on
1 July 2009
Relevant facts
You have an illness.
You have a referral from your doctor to a specific naturopath and a specific chiropractor.
You incur expenses for chemist scripts, chiropractor and naturopath treatments and supplements.
Relevant legislative provisions
Income Tax Assessment Act 1936 Section 159P
Reasons for decision
A medical expense 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.
The medical expenses tax offset is only available if the amount of medical expenses (reduced by any entitlement to reimbursement from a health fund or government authority) exceeds annual limit which is $1,500 in the 2009-10 income year and $2,000 for the 2010-11 income year (please note that the limit may be different for subsequent years). The tax offset is 20% of the amount by which the net medical expenses exceeds the relevant amount mentioned for each income year.
Chemist scripts
Subsection 159P(4) of the ITAA 1936 defines which medical expenses are allowable in the calculation of the offset.
Paragraph (a) of the definition of medical expenses includes payments to a legally qualified medical practitioner, nurse or chemist, or a public or private hospital, in respect of an illness or operation.
In your case, where you have purchased medication from a chemist, as prescribed by your doctor, and it is in respect of an illness, it is considered an eligible medical expense. Therefore, the cost of chemist scripts can be included when calculating the medical expenses tax offset.
Chiropractor and Naturopath visits and medications
Paragraph (d) of the definition includes payments for therapeutic treatment administered by direction of a legally qualified medical practitioner
It was held in Case A53 69 ATC 313; 15 CTBR (NS) Case 30 that the mere suggestion or recommendation by a medical practitioner that the patient undergoes therapeutic treatment is not sufficient for the payment to qualify as medical expenses. The patient would have to be referred by a medical practitioner to a particular person for specific treatment.
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.
In addition, the Administrative Appeals Tribunal found in Case R95 84 ATC 633; 27 CTBR (NS) Case 148 that 'therapeutic treatment' necessitated the exercise of professional skill in the medical field. This would normally involve the person administering the treatment using chemical agents or drugs or some physical and mental processes which are directed towards the cure or management of a disease or ailment.
Treatments provided by a chiropractor and a naturopath are generally considered to be therapeutic in nature.
You were referred by your legally qualified medical practitioner to a specific chiropractor and naturopath for the treatment of specified ailments. As discussed above, the costs incurred for these specific therapeutic treatments, including medications required, do qualify as medical expenses under section 159P of the ITAA 1936 and can be included when calculating the medical expenses tax offset.
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