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Ruling

Subject: Net medical expenses tax offset - therapeutic treatment

Question

Do expenses incurred for therapeutic treatment qualify as eligible medical expenses for the purposes of the net medical expenses tax offset?

Answer

Yes

This ruling applies for the following periods:

Year ending 30 June 2013

The scheme commences on:

1 July 2012

Relevant facts and circumstances

Your child has been diagnosed as suffering from a disorder.

Your child's paediatrician has recommended that they would benefit significantly from an integrated program of therapeutic treatment. The program uses occupational therapists, speech therapists, early childhood teachers, psychologists and care workers to assist affected children to develop skills and improve behaviour.

Although the integrated program is subsidised by the Government you will incur extensive out of pocket expenses.

Your child was referred to the program by their paediatrician who also regularly monitors the outcomes of the program.

Relevant legislative provisions

Income Tax Assessment Act 1936 Section 159P

Reasons for decision

Subsection 159P(3A) of the Income Tax Assessment Act 1936 (ITAA 1936) provides that a rebate is allowable to a taxpayer whose net medical expenses in the year of income exceed the threshold.

The expenses must be paid by a resident taxpayer in respect of themselves or their resident dependant. The taxpayer's child is a resident dependant in accordance with subsection 159P(4) of the ITAA 1936.

Medical expenses are defined in subsection 159P(4) of the ITAA 1936.

Paragraph (d) of the definition includes payments 'for therapeutic treatment administered by direction of a legally qualified medical practitioner'.

In order to qualify for the rebate such payments must meet the following conditions;

The general concept of therapeutic treatment is healing or curing rather than preventing the need for therapy (Case S2, 85 ATC 102; 17 TBRD Case S8 ).

In Case R95 84 ATC 633; Case 148 27 CTBR (NS) 1154, the Administrative Appeals Tribunal found 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.

The Commissioner accepts that the integrated program therapy is therapeutic treatment for the purposes of subsection 159P(4) of the ITAA 1936.

The therapeutic treatment must be administered by direction of a legally qualified medical practitioner.

A mere suggestion or recommendation by a doctor to a patient that the patient undergo therapeutic treatment is not enough for the associated expenses to qualify as medical expenses. The patient must be referred to a particular person for the therapeutic treatment (Case A53 69 ATC 313).

In your case, your child was referred for the therapy program by a legally qualified medical practitioner who regularly monitors the outcomes of the program. Accordingly, the expenses you incurred which relate directly to the administering of this program are considered eligible medical expenses for the purposes of the net medical expense tax offset.

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