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Edited version of private ruling

Authorisation Number: 1011594374841

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Ruling

Subject: Medical expenses tax offset

Do payments made to legally qualified medical practitioners, nurses, chemists, or private or public hospitals by you in relation to your implantable contact lense surgery qualify as medical expenses for the purpose of claiming a medical expenses tax offset?

Yes.

This ruling applies for the following period

Year ended 30 June 2011

The scheme commenced on

1 July 2010

Relevant facts

You suffer from an eye disorder.

You are unable to continue wearing contact lenses.

You were referred to a specialist medical practitioner who has advised that you are an unsuitable candidate for other treatment. They suggested 'implantable contact lenses' (ICLs) as an alternative.

ICL's correct vision in much the same way that external contact lenses do, except ICLs are placed inside the eye where they permanently improve vision.

The surgery will be carried out by a specialist qualified medical practitioner in a hospital.

You will under the procedure later this year.

Other Relevant Comments

Internet information on ICLs can be found on the following site:

http://www.docshop.com/education/vision/refractive/icl/

Taxpack 2010 at T10 includes contact lenses as medical expenses which qualify for the tax offset.

Relevant legislative provisions

Income Tax Assessment Act 1936 Section 159P.

Reasons for decision

Subsection 159P(3A) of the Income Taxation Assessment Act 1936 (ITAA 1936) provides that a tax offset is allowable to a taxpayer whose net medical expenses exceed $2,000 for the 2011 income year.

Medical expenses are defined in subsection 159P(4) of the ITAA 1936. Paragraph (a) of the definition includes payments made to a legally qualified medical practitioner, nurse, chemist or public or private hospital in respect of an illness or operation.

The term 'illness' is not defined in the ITAA 1936 and therefore it is necessary to look at the ordinary meaning of the term. An illness includes a sickness, disease, or disorder of the body or the mind and involves a deviation from the normal healthy state. An 'illness' would include eye disorders in the nature of short sightedness, long sightedness or a stigma.

The term 'operation' is not defined in the ITAA 1936 and therefore it is again necessary to look at the ordinary meaning of the term. An 'operation' in a medical sense means an act or series of acts performed on the body of a patient for their relief or to restore them to a normal condition. It involves the use of surgical instruments as distinguished from therapeutic treatment.

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:

To determine if an expense is an ineligible medical expense for medical expenses tax offset purposes two factors have to be considered:

In applying the above factors to your situation, the ICL procedure is not considered cosmetic in nature as it relates to permanent vision correction for your eye disorder. 

In your case, you have an eye disorder which qualifies as an illness and will undergo non-cosmetic surgery that will be carried out by a specialist qualified medical practitioner in a hospital. The ICL surgery is accepted as being an operation performed in order to correct or improve the disorder.

Accordingly, payments made to legally qualified medical practitioners, nurses, chemists or private or public hospitals by you in relation to your ICL surgery will qualify as 'medical expenses' for the purpose of the medical expenses tax offset under subsection 159P(4) of the ITAA 1936.

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