Edited version of private ruling

Authorisation Number: 1011566013664

This edited version of your ruling will be published in the public Register of private binding rulings after 28 days from the issue date of the ruling. The attached private rulings fact sheet has more information.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. Contact us at the address given in the fact sheet if you have any concerns.

Ruling

Subject: Medical expenses tax offset

Question 1

Are you entitled to include the net cost of your doctor's fees and the supplements prescribed by your doctor in determining your eligibility to a medical expenses tax offset?

Answer

Yes.

Question 2

Are you entitled to include the following expenses in determining your eligibility to a medical expenses tax offset:

· naturopath's fees

· supplements purchased from your naturopath and chemist, and

· gluten free food?

Answer

No.

This ruling applies for the following period:

1 July 2009 to 30 June 2010

The scheme commences on:

1 July 2009

Relevant facts and circumstances

You have been tested for coeliac disease but it has not been clinically proven that you suffer from the disease.

You have provided a letter from your doctor advising that there is a high probability that you have coeliac disease. You have genes that are found in 90% of coeliacs and have a relative who is a proven coeliac. Your doctor recommends you abstain from all forms of gluten.

You purchase gluten free food which is often more expensive than the gluten inclusive equivalent.

Your doctor recommended seeing a naturopath to repair past nutritional damage. You chose your naturopath from the Yellow pages.

You have changed doctors during the year and have made each doctor aware of the action you are taking under the guidance of your naturopath.

In one instance, where western drugs were not working your doctor verbally advised you to return to your naturopath for treatment.

You have purchased various supplements from your doctor, naturopath and the chemist.

The supplements purchased from your naturopath and chemist were not prescribed supplements and could be purchased by the general public.

You have incurred expenses in excess of $1,500 and have retained the receipts for all of the expenses.

Relevant legislative provisions

Income Tax Assessment Act 1936 Section 159P.

Reasons for decision

Summary

Expenses incurred in visiting your doctor and purchasing supplements from them are included in calculating your entitlement to a medical expenses tax offset. These expenses fall within the definition of a medical expense.

The cost of naturopathic treatment and supplements purchased from your naturopath and chemist are not eligible medical expenses and cannot be included in calculating your entitlement to a medical expenses tax offset. These expenses fall within the definition of therapeutic treatment but were not undertaken at the specific direction and supervision of your doctor.

Gluten free food does not fall within the definition of medical expenses and cannot be included in calculating your entitlement to a 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 pays medical expenses in an income year for themselves or a dependant who is an Australian resident. The medical expenses tax offset equals 20% of the amount by which the net medical expenses exceed $1,500 for that income year.

Medical expenses are defined in subsection 159P(4) of the ITAA 1936 to include payments to a legally qualified medical practitioner, nurse or chemist, or a public or private hospital, in respect of an illness or operation or payments for therapeutic treatment provided the treatment is administered at the direction of a legally qualified medical practitioner.

Therapeutic treatment as a concept is concerned with healing or curing, rather than preventing the need for therapy. Therapeutic treatment involves the exercise of professional skill in the medical field in a way that normally involves the person administering the treatment using drugs or physical or mental processes of one kind or another for the purpose of curing or managing a disease.

For treatment to be regarded as being administered by direction of a legally qualified medical practitioner, the treatment needs to be advised, prescribed or ordered by a legally qualified medical practitioner. It also requires monitoring to some extent by the medical practitioner.

In your case you have incurred various expenses. Each expense will be examined separately as to it's eligibility to be included when calculating your entitlement to a medical expenses tax offset:

Doctor's fees

You have incurred expenses in visiting your doctor with regards to your medical conditions.

Payments to your doctor are eligible medical expenses as they are payments to a legally qualified medical practitioner in respect of an illness.

Naturopath's fees

As discussed above, eligible medical expenses include payments for therapeutic treatment administered at the direction of a legally qualified medical practitioner.

It was held in Case A53 69 ATC 313; (1969) 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.

Naturopathic treatment is an example of therapeutic treatment.

In your case, your doctor recommended you visit a naturopath but did not refer you to a specific naturopath. Throughout your treatment you have kept your doctors informed of the naturopath's recommendations and the action you are taking under the naturopath's direction. However your doctor does not provide direction to the naturopath as to your treatment.

As the naturopathic treatment was not referred to, nor is it actively overseen by a legally qualified medical practitioner, the naturopathic fees you have incurred do not qualify as eligible medical expenses.

Thus you cannot include your naturopathic fees in calculating your eligibility to a medical expenses tax offset.

Supplements

Supplements fall within the definition of therapeutic treatment. The cost of the supplements will only be eligible medical expenses where the supplements are prescribed by a legally qualified medical practitioner. This is regardless of whether the supplements are purchased from chemists, naturopaths, health food stores or supermarkets.

The supplements you purchased from your naturopath and chemist were prescribed by your naturopath. As your naturopath is not working under the direction of your doctor these expenses are not eligible medical expenses.

The supplements you purchased directly from your doctor are eligible medical expenses as your doctor prescribed these supplements.

Only the cost of the supplements purchased from your doctor can be included in calculating your eligibility to a medical expenses tax offset.

Gluten free food

In Case R95 (1984) 27 CTBR (NS) 1154; 84 ATC 633 it was held that the cost of foods for special dietary purposes did not qualify as therapeutic treatment. Taxation Ruling IT 2146 considers that the cost of food substitutes or special dietary foods are not medical expenses unless prescribed by a legally qualified medical practitioner as being in respect of an illness and purchased from a legally qualified practitioner.

You have purchased gluten free food as tests have shown that you have genes that are found in 90% of coeliacs and have a relative who is a proven coeliac. Whilst the dietary modifications have been recommended by your doctor, the foods are not specialised, being everyday foods, albeit without certain additives or natural chemicals, nor were they purchased from a legally qualified chemist.

While we acknowledge the cost of many gluten free foods is far greater than the gluten inclusive equivalent, the cost of purchasing these foods does not fall within the definition of medical expenses. As such, you are not entitled to include these items when calculating your entitlement to a medical expenses tax offset.

Copyright notice

© Australian Taxation Office for the Commonwealth of Australia

You are free to copy, adapt, modify, transmit and distribute material on this website as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).