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Edited version of private ruling
Authorisation Number: 1011578808266
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Ruling
Subject: Medical expenses tax offset
1. Are you entitled to claim the medical expenses offset for a cosmetic procedure?
No.
2. Are you entitled to claim the medical expenses offset for a rebatable procedure?
Yes.
This ruling applies for the following periods:
Year ended 30 June 2010
The scheme commenced on:
1 July 2009
Relevant facts and circumstances
You had two surgical procedures.
One was cosmetic and no rebate was received.
For the other you received a rebate.
Relevant legislative provisions
Income Tax Assessment Act 1936 Section 159P.
Income Tax Assessment Act 1936 Subsection 159P(4).
Reasons for decision
Under section 159P of the Income Tax Assessment Act 1936 (ITAA 1936) a tax offset is available to a resident taxpayer whose net medical expenses paid in the year of income exceed $1,500.
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.
Subsection 159P(4) of the ITAA 1936 was amended to define ineligible medical expenses as payments to a legally qualified practitioner, nurse or chemist, or a public or private hospital, in respect of a cosmetic operation that is not a professional service for which a Medicare benefit is payable under Part II of the Health Insurance Act 1973. The amendments were made to the legislation for the income years commencing on or after 1 July 2005.
To determine whether a procedure is cosmetic in nature, the ordinary definition of cosmetic applies. The Macquarie dictionary defines cosmetic as:
· serving to beautify, imparting or improving beauty, especially of the complexion, or
· designed to effect a superficial alteration while keeping the basis unchanged.
To determine if an expense is an ineligible medical expense for medical expenses tax offset purposes two factors have to be considered:
· Is the procedure cosmetic in nature according to the ordinary definition of cosmetic, and
· If the procedure is cosmetic, is a Medicare benefit payable?
Procedure one
In applying the above factors, the procedure one procedure are considered cosmetic in nature and there is no Medicare benefit payable, as these procedures do not meet the criteria for a benefit to be paid. Therefore, they are ineligible medical expenses for medical expenses tax offset purposes and consequently you are not entitled to include the procedure one expenses when calculating a medical expenses tax offset.
Procedure two
You were entitled to a Medicare rebate for this procedure.
Therefore, the out of pocket expenses you incurred, that is, the gap between the full cost you incurred and the amount you were refunded for the procedure two would be eligible expenses for the medical expenses tax offset.
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