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Ruling

Subject: medical expenses

Question 1

Can you include the costs incurred for prescriptions purchased at a chemist when calculating the medical expenses tax offset?

Answer:

Yes.

Question 2

Can you include the cost of therapeutic massages, acupuncture and herbal remedies when calculating the medical expenses tax offset?

Answer:

No.

Question 3

Are you entitled to include the cost of an specific machine in a claim for medical expenses tax offset?

Answer:

No.

This ruling applies for the following periods

Year ended 30 June 2011

Year ended 30 June 2012

Year ended 30 June 2013

Year ended 30 June 2014

The scheme commenced on

1 July 2010

Relevant facts

You have been diagnosed as suffering from several medical conditions, and have had these health issues for some time.

You initially consulted doctors and other health professionals, using prescribed medications, none of which provided substantial long term relief.

Your doctor recommended generally that you try alternative options, such as acupuncture and massage therapy.

Following these recommendations, you consulted a naturopath who provides herbal supplements, massage therapy and acupuncture.

Your naturopath recommended you purchase a specific machine which helps you manage your condition.

You did not purchase the specific machine from a chemist.

The combination of conventional and non-conventional treatments allows you to manage your symptoms sufficiently to remain at work.

Without these treatments you would be only able to work in a very limited capacity.

Relevant legislative provisions

Income Tax Assessment Act 1936 Section 159P and

Income Tax Assessment Act 1936 Section 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 any other fund) in the year of income exceed a certain threshold.

The tax offset is 20% of the amount by which the net medical expenses exceeds the relevant threshold for the 2010-11 and 2011-12 income years.

The term medical expenses is defined in subsection 159P(4) of the ITAA 1936. In your case, the most relevant parts of this definition are:

Prescriptions purchased from a chemist

In your case, where you have purchased medication from a chemist, as prescribed by your doctor, and it is in respect of an illness, it is considered an eligible medical expense. Therefore, the cost of these prescriptions can be included when calculating the medical expenses tax offset.

Naturopath consultation, acupuncture, massage therapy and herbal medications

The therapeutic treatment must be 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 (18 TBRD Case T67; 14 CTBR (NS) Case 31). 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 addition, the Administrative Appeals Tribunal found in Case R95 84 ATC 633; Case 148 27 CTBR (NS) 1154 that therapeutic treatment necessitated the exercise of professional skill in the medical field. This would normally involve the person administering the treatment using chemical agents or drugs or some physical and mental processes which are directed towards the cure or management of a disease or ailment.

Treatments provided by a naturopath are generally considered to be therapeutic in nature, as is acupuncture and massage therapy.

You were not referred by your legally qualified medical practitioner to a specific naturopath for the treatment of specified aliments. As discussed above, the costs incurred for these specific therapeutic treatments, including herbal medications required, do not qualify as medical expenses under section 159P of the ITAA 1936 and cannot be included when calculating the medical expenses tax offset.

Medical or surgical appliances

The purchase of your specific medical machine was not prescribed by your doctor. The acquisition costs do not match any definition of a medical expense. You are therefore not entitled to include the cost of the specific medical machine in a claim for a medical expenses tax offset.

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