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Ruling
Subject: Medical expenses tax offset - midwifery
Question
Can the cost of a midwife be included as a medical expense for the purpose of calculating a medical expenses tax offset?
Answer
Yes.
This ruling applies for the following period
Year ended 30 June 2012
The scheme commenced on
1 July 2011
Facts
You are a resident of Australia for taxation purposes.
You engaged the services of a registered midwife who is a registered nurse to assist in the birth of your child.
The midwife provided ante-natal, childbirth and post-natal care for yourself and your child.
You paid the midwife for these services.
You have not received any reimbursement for these costs from Medicare, a private health fund or any other source.
Relevant legislative provisions
Income Tax Assessment Act 1936 Section 159P
Income Tax Assessment Act 1936 Subsection 159P(3A)
Income Tax Assessment Act 1936 Subsection 159P(4)
Reasons for decision
Subsection159P (3A) of the Income Tax Assessment Act 1936 (ITAA 1936) provides that a tax offset is available to a taxpayer whose net medical expenses in the year of income exceed the relevant threshold for that year. The medical expenses tax offset threshold for the 2012 tax year is $2,060.
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.
To qualify for the offset, the medical expenses must be paid by a resident taxpayer in respect of themselves or a resident dependant. Dependant is defined in subsection 159P(4) of the ITAA 1936 to mean:
(a) the spouse of the taxpayer;
(b) a child of the taxpayer who is under 21; or
(c) a person for whom the taxpayer is entitled to a dependent rebate or a child or student in respect of whom the taxpayer qualifies for a notional dependents rebate.
Payments to a legally qualified medical practitioner, nurse or chemist, or a public or private hospital.
The term legally qualified requires that the doctor, nurse or chemist is licensed or registered to practice the profession in the place where he or she practises the profession.
You paid the midwife for their services. They are a legally qualified medical practitioner and midwife, thus payments to them satisfy the first requirement of paragraph (a) of the definition of medical expenses as contained in subsection 159P(4) of the ITAA 1936.
In respect of illness or operation.
Taxation Ruling IT 2359 contains the Commissioner's view as to the meaning of illness. Paragraph 5 of IT 2359 states:
The terms illness and operation are not defined in the income tax law. The terms are not technical and are not to be given the meanings which are ordinarily given to them.
This ruling goes on to endorse Dr Gerbers understanding of the ordinary meaning of illness as stated in Case Q21 83 ATC 77; Case 85 26 CTBR(NS) 570:
Illness is not defined in the Act. However, I do not accept that it is a term of art. Adopting a purposive construction, I find the term includes any condition marked by a pronounced deviation from the normal healthy state. If this is the correct view, illness must include any disorder of body, function or systems.
It can be argued that pregnancy is a process in which the normal healthy state is markedly altered for the duration of and for some time after the pregnancy and particularly during childbirth. It is a condition which carries significant risk of morbidity and mortality, for both mother and child. As such, it is considered that pregnancy and childbirth would be caught by the ordinary meaning of the term illness.
Therefore, the payment made for the services of your registered midwife in respect of an illness satisfies the second requirement of paragraph (a) of the definition of medical expenses as contained in subsection 159P(4) of the ITAA 1936.
Accordingly the fees paid to your midwife to provide support during the birth of your child would qualify as a medical expense for the purposes of claiming the medical expenses tax offset.
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