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Ruling

Subject: Medical expense tax offset

Question 1

Is the cost of traditional Chinese medicine (TCM) and any herb prescribed by a TCM practitioner an eligible medical expense for the purposes of the medical expenses tax offset?

Answer: No.

Question 2

Is the cost of the consultation by a TCM practitioner an eligible medical expense for the purposes of the medical expenses tax offset?

Answer: No.

This ruling applies for the following period

Year ended 30 June 2010

Year ended 30 June 2011

The scheme commenced on

1 July 2009

Relevant facts and circumstances

Your child suffers from a medical condition which has resulted in their hospitalisation on several occasions.

You have consulted and used the services of medical practitioners who have administered western medicine but all to no avail. They advised you to seek alternative medicines, practices or fields as they acknowledge that western medicine has no long term remedy.

You were advised that whilst western medical practitioners acknowledge TCM, they can not openly endorse it but they encouraged you to pursue this avenue of treatment.

You do not require a doctor's referral to visit a TCM practitioner as an appointment will do.

You sought alternative medicines and pursued TCM and after regular consultations with a TCM practitioner and the prescribing of herbal remedies, you have seen a remarkable improvement in your child's condition.

The treatment by a TCM practitioner is ongoing.

Your medical insurer recognises TCM and provides a rebate back for the TCM consultation.

Relevant legislative provisions

Income Tax Assessment Act 1936 Subsection 159P(1)

Income Tax Assessment Act 1936 Subsection 159P(4)

Reasons for decision

Summary

The cost of using a TCM practitioner for your child's ongoing health issue is not an eligible medical expense for the purposes of the medical expenses tax offset as the TCM practitioner is not a legally qualified medical practitioner. Also, the therapeutic treatment is not administered by direction of a legally qualified medical practitioner.

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, 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.

For the 2010-11 income year the medical expenses tax offset is 20% of the amount by which the net medical expenses exceed $2,000. Please note that the threshold amount is subject to indexation and will change in future income years.

Paragraph (a) of the definition of medical expenses in subsection 159P(4) of the ITAA 1936 includes payments made to a legally qualified medical practitioner in respect of an illness or operation.

You do not satisfy the specific criteria required in paragraph (a) of the definition of medical expenses as you have not made the payments to a legally qualified medical practitioner.

Paragraph (d) of the definition of medical expenses in subsection 159P(4) of the ITAA 1936 includes payments made for therapeutic treatment administered by direction of a legally qualified medical practitioner.

It was held in Case A53 69 ATC 313; 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.

Therapeutic treatment as a concept is concerned with healing or curing, rather than preventing the need for therapy (Case T67 (1968) 18 TRBD 346; (1967) 14 CTBR (NS) Case 31). Therapeutic treatment involves the exercise of professional skill in the medical field in a way which 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 the disease or ailment (Case R95 84 ATC 633; (1984) 27 CTBR (NS) Case 148).

Although the treatment must be administered by direction of a legally qualified medical practitioner, the treatment need not be administered by such a practitioner.

In your case, you were not referred by a legally qualified medical practitioner to the TCM practitioner. As such the treatment is not administered under the instruction or guidance of a legally qualified medical practitioner.

Therefore, the costs you have paid for the consultation and herbs prescribed by the TCM practitioner do not qualify as eligible medical expenses under paragraph (d) of the definition in subsection 159P(4) of the ITAA 1936 and cannot be included when calculating the medical expenses tax offset.

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