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Ruling

Subject: medical expenses tax offset

Question 1

Can you include the costs incurred for fees paid for an escort when being transported between the nursing home and specialists and hospitals when calculating the medical expenses tax offset?

Answer:

Yes.

Question 2

Can you include the costs incurred for a wheelchair taxi for your transport between the nursing home and specialists and hospitals when calculating the medical expenses tax offset?

Answer:

No

This ruling applies for the following period

Year ended 30 June 2013

The scheme commenced on

1 July 2012

Relevant facts and circumstances

You are permanently confined to a wheelchair and reside in a high care nursing home.

You periodically have to be transported in a taxi to and from specialists and hospitals.

You have to have a person to accompany you when being transported, and these people are provided by an agency. The person is not a qualified nurse.

You have very limited capacity to move your wheelchair yourself, and are unable to move yourself as required in a doctor's rooms or hospital environment.

The escorting person assists you at the nursing home to get into the wheel chair taxi, accompanies you to the destination, and then assists you from the taxi into the premises to the correct floor and nurses station.

When you are ready to return to the nursing home, the escort calls the wheelchair taxi, assists you into it, accompanies you back to the nursing home, then assists you back into the premises.

Relevant legislative provisions

Income Tax Assessment Act 1936 Section 159P

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

Reasons for decision

Payment for escort

A medical expenses tax offset is available to a taxpayer under section 159P of the Income Tax Assessment Act 1936 (ITAA 1936) where the taxpayer incurs medical expenses in an income year for themselves or a dependant who is an Australian resident. The medical expense tax offset is 20% of the amount by which the net medical expenses exceed the threshold for that income year.

The term 'medical expenses' is defined in paragraph 159P(4)(h) of the ITAA 1936 to include payments made 'as remuneration of a person for services rendered by them as an attendant of a person who is blind or permanently confined to a bed or an invalid chair.'

The term 'attendant' is not defined in the ITAA 1936 or the Income Tax Assessment Act 1997. Accordingly, it will have its ordinary meaning, having regard to the purpose and context of the provisions in which it appears: Chaudhri v. Federal Commissioner of Taxation [2001] FCA 554; 2001 ATC 4214; (2001) 47 ATR 126. The Macquarie Dictionary, 2005, 4th edition, The Macquarie Library Pty Ltd., (NSW), relevantly defines an attendant 'as someone who provides personal support and physical assistance for a person with a physical disability'.

That is, the requirement that the services be provided 'as an attendant' of a person necessitates that the services are primarily to support and assist the person, who is blind or permanently confined to a bed or an invalid chair, while they perform functions that they can with that support and assistance. The phrase 'as an attendant' in subparagraph (h) defines the relevant services as those necessitated by or founded in the disability: that is, not just services rendered to the person with a disability but services rendered to the person because they are disabled.

In your case, the escort is regarded as an attendant for section 159P of the ITAA 1936 purposes.

The wording of paragraph 159P(4)(h) of the ITAA 1936 differs from the wording of paragraphs 159P(4)(a) to 159P(4)(c) of the ITAA 1936 which require that for a payment to qualify as a medical expense it must be paid 'to' specific people, such as a legally qualified medical practitioner. Paragraph 159P(4)(h) of the ITAA 1936 does not require that the payment be made 'to' a specific person but rather that it be paid 'as' remuneration 'of' a person for the services they provide as an attendant. There is no requirement therefore that the payment be made directly to the person who provides the care.

This interpretation has been supported in the Small Taxation Claims Tribunal, in [2001] AATA 944 (Unreported, Senior member MD Allen, 15 November 2001). In that case the Tribunal allowed a taxpayer a medical expenses tax offset in respect of expenses paid to a company that provided carers. The rebatable amount only included payments actually made by the company to the carers. The portion of the expenses that was retained by the company for administrative services was not included as part of the rebatable amount.

That is, where the payment is made to another entity, the only amount which will qualify for the tax offset is the amount that represents the remuneration of a person for their services as an attendant or carer. For example if the entity providing the care includes administration costs as part of the total cost for their services then the administration costs would not qualify as medical expenses.

In your case, as you are permanently confined to a bed or wheelchair the payments to the carer provider organisation made in respect of the escort for you to assist in facilitating access for your treatment, are medical expenses under paragraph 159P(4)(h) of the ITAA 1936.

Transport

Subsection 159P(4) of the ITAA 1936 specifically defines medical expenses which are eligible for the medical expenses tax offset. The definition does not include the costs of travel to obtain medical treatment. This was confirmed by the decision of the Administrative Appeals Tribunal in Case R12 84 ATC 165; 27 CTBR (NS) Case 63. In that case, travelling expenses whilst necessary in order to receive medical treatment were held not to be a payment for the medical treatment.

The taxi driver is not regarded as an attendant. Accordingly, fees for taxi expenses incurred in relation to obtaining medical treatment are not medical expenses for the purpose of the medical expenses tax offset.

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