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Edited version of private ruling
Authorisation Number: 1011641995614
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Ruling
Subject: Medical expenses tax offset
Question 1
Do the fees paid to residential care facility qualify as eligible medical expenses for the purposes of the medical expenses tax offset?
Answer
No.
Question 2
Do the fees paid to respite carers qualify as eligible medical expenses for the purposes of the medical expenses tax offset?
Answer
No.
This ruling applies for the following periods:
Year ended 30 June 2009
Year ended 30 June 2010
Year ended 30 June 2011
The scheme commences on:
1 July 2008
Relevant facts and circumstances
Due to your medical condition you reside at a low level care facility.
The residential care facility does not receive government funding but is registered with and monitored by the State Government.
The care facility is not an approved aged care provider under the Aged Care Act 1997.
You have not received an assessment by the Aged Care Assessment Team.
You receive respite care where the carers take you swimming and for walks. The carers are not registered nurses.
Relevant legislative provisions
Income Tax Assessment Act 1936 Subsection 159P(4).
Reasons for decision
Section 159P of the Income Tax Assessment Act 1936 (ITAA 1936) provides that a tax offset is allowable to a taxpayer whose net medical expenses (that is, medical expenses less any amount paid or payable by Medicare or a private health fund) in the year of income exceed a certain threshold.
The amount of the tax offset is calculated as 20% of the excess of net medical expenses over the relevant threshold.
In order to claim the tax offset, the expenditure must qualify as an eligible medical expense. Subsection 159P(4) of the ITAA 1936 outlines several payments as medical expenses.
Paragraph (a) of the definition of medical expenses under subsection 159P(4) of the ITAA 1936 includes payments made to a medical practitioner, nurse or chemist, or a public or private hospital in respect of an illness or operation.
Fees paid to the residential care facility
The term hospital is not defined for the purposes of section 159P of the ITAA 1936. It therefore has its ordinary meaning. The Macquarie Dictionary defines hospital as an institution in which sick or injured persons are given medical or surgical treatment.
To be considered an eligible medical expense, the payment to the hospital must be in respect of an illness or operation. Whether or not the payment is in respect of an illness or operation depends on the level of care received. Taxation Ruling TR 93/14 lists the 'approved personal care services' and includes "the provision of long-term emotional support to, and direct supervision of, patients diagnosed as suffering form a form of dementia or functional psychotic condition requiring long-term medication".
Furthermore, payments to an aged care facility or nursing home will be eligible for the medical expenses tax offset where the home is approved under the Aged Care Act 1997 (Taxation Ruling IT 261) and the recipient has received an assessment by the Aged Care Assessment Team (ACAT).
In your case, you are residing at a low level care facility due to your medical condition.
The care facility is not an approved aged care provider under the Aged Care Act 1997 and you have not received an assessment from the ACAT.
While it is appreciated that the care you receive is in respect to your medical condition, the facility is not considered to be a hospital for the purposes of the medical expenses tax offset.
Therefore, the fees paid to the residential care facility are not considered eligible medical expenses for the purposes of the medical expenses tax offset.
Fees paid to respite carers
In your case, you receive respite care from carers who are not qualified medical practitioners or nurses.
Therefore, the fees paid to the respite carers are not considered eligible medical expenses for the purposes of the medical expenses tax offset.
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