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Ruling

Subject: medical expenses tax offset

Question

Are you entitled to a medical expenses tax offset for the purchase and installation of a lift in your home?

Answer: No

Question 2

Are you entitled to claim a deduction for decline in value for the purchase and installation of a lift in your home?

Answer: No

This ruling applies for the following period

Year ended 30 June 2011

The scheme commenced on

1 July 2010

Relevant facts

You and your spouse both suffer from a medical condition which severely restricts movement for which you have received medical treatment. You are reluctant to have corrective surgery due to post operative complications which can be exacerbated by your age.

You have a written recommendation from your doctor stating that both you and your spouse suffer from this condition, and that you would benefit greatly from the installation of a lift in your home.

You have had a lift which can accommodate a wheelchair installed by a specialist lift company.

The lift is used only by you and your spouse.

The website of the manufacturer of your lift states that the lift is one of a range of platform lifts manufactured and sold for the public access market, that is, household and commercial use.

The lift is made to accommodate shopping carts, baby stroller and wheelchairs.

Relevant legislative provisions

Income Tax Assessment Act 1936 Section 159P.

Income Tax Assessment Act 1936 Subsection 159P(1).

Income Tax Assessment Act 1936 Subsection 159P(4).

Reasons for decision

A tax offset is available to you under section 159P of the Income Tax Assessment Act 1936 (ITAA 1936), where you pay medical expenses in an income year for you or a dependant who is an Australian resident.

The medical expense tax offset is only available if the amount of medical expenses (reduced by any entitlement to reimbursement from a health fund or government authority) in an income year exceeds the threshold for that year. The tax offset is 20% of the amount by which the net medical expenses exceed the threshold for that income year.  

Subsection 159P(4) of the ITAA 1936 defines 'medical expenses to include 'payments made in respect of a medical or surgical appliance prescribed by a legally qualified medical practitioner'.  

According to Taxation Ruling TR 93/34, a 'medical or surgical appliance' for the purposes of paragraph (f) of the definition of 'medical expenses' in subsection 159P(4) is an instrument, apparatus or device which is:

Taxation Ruling TR 93/34 explains at paragraph 15 that: 

'For an item to be a medical or surgical appliance, it must be an aid to function or capacity (Ildes ATC at 4216; ATR at 954). This test looks to the character of the appliance, not the purpose for which it is prescribed or used. It is not sufficient that a medical practitioner prescribes an appliance for medical or surgical ends

Taxation Ruling TR 93/34 then lists examples of articles which are considered to be or not to be 'medical or surgical appliances.' At paragraph 9(i), TR 93/34 lists ' lifts for conventional commercial or household use' as not being a 'medical or surgical appliance.'

The website of the manufacturer of your lift states that it is suitable for use "in day care centres, schools and universities, and provides access solutions for educational institutions at every level". "It is suitable for use in offices, stores and shopping centres. The platform lifts give shoppers the freedom to move about easily pushing a shopping cart or baby stroller, using a wheelchair or loaded with lots of bags".

This means that even though the lift can be used to assist those with medical needs or mobility impairment, it is not manufactured, distributed or generally recognised as an aid to the function or capacity of a person with a disability or an illness.

Therefore, you are not entitled to include the costs in a calculation for a medical expenses tax offset.

Decline in value

A definition of a depreciating asset is an asset that has a limited effective life and can be expected to decline in value over the time it is used.

Under income tax law, you are allowed to claim certain deductions for expenditure incurred in gaining or producing assessable income. As your lift is used for a private purpose, and is not used for an income producing purpose, there is no decline in value deduction allowable.

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