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Edited version of private ruling
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Ruling
Subject: Medical expenses tax offset
Question 1
Can the cost of treatment administered by an overseas legally qualified medical practitioner be included as medical expenses for the purpose of calculating a medical expenses tax offset?
Answer: Yes.
Question 2
Can the cost of travel, accommodation and insurance to receive treatment overseas, be included as medical expenses for the purpose of calculating a medical expenses tax offset?
Answer: No.
This ruling applies for the following period
Year ended 30 June 2011
The scheme commenced on
1 July 2010
Relevant facts and circumstances
You are an Australian resident for income tax purposes.
You suffer from severe back pain which has been diagnosed by your doctor.
You have a letter from a doctor that confirms your injury.
The surgery is currently not available in Australia.
The surgery is available overseas.
The surgery will be performed by a surgeon in a particular month of the recent year .
Your case has been approved for the surgery itself to be pro-bono.
You intend to travel overseas and will incur costs for the treatment, travel, accommodation and insurance.
Relevant legislative provisions
Income Tax Assessment Act 1936 Section 159P.
Reasons for decision
While these reasons are not part of the private ruling, we provide them to help you to understand how we reached our decision.
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 pays 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 medical expenses tax offset is 20% of the amount by which the net medical expenses exceed $2,000 for the income year.
Net medical expenses are the medical expenses a taxpayer has paid less any refunds they received, or could have received, from Medicare or a private health fund.
Paragraph 159P(4)(a) of the ITAA 1936 provides that payments to a legally qualified medical practitioner, nurse or hospital in respect of an illness or operation are medical expenses.
However, it is not necessary that the payments be made to a resident of Australia or that they are paid in Australia. Therefore, medical expenses paid during an overseas trip may qualify for the tax offset.
In your case, you intend to travel overseas to receive treatment for your injury which will be administered by a legally qualified medical practitioner. Therefore, the costs of your treatment will be eligible medical expenses for medical expenses tax offset purposes and you will be entitled to include the cost of the treatment as expenses when calculating a medical expenses tax offset.
The term medical expenses is defined at subsection 159P(4) of the ITAA 1936 for the purposes of the medical expenses tax offset to cover payments to doctors, nurses, chemists, dentists, opticians and optometrists. It also covers payments for therapeutic treatment, medical or surgical appliances, the maintenance of a trained guide dog and remuneration paid to an attendant of an invalid or blind person.
Expenses incidental to obtaining medical treatment, such as travel, accommodation and insurance incurred in travelling to a place where medical treatment is available do not qualify for the medical expenses tax offset.
Accordingly, travel, accommodation and insurance expenses incurred in order to obtain medical treatment are not medical expenses as defined in subsection 159P(4) of the ITAA 1936. Therefore you are not able to include the cost of travel, accommodation and insurance expenses in your claim for a medical expenses tax offset.
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