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Edited version of your written advice
Authorisation Number: 1013026118468
Date of advice: 1 June 2016
Ruling
Subject: Net Medical Expenses Tax Offset
Question 1
Are you entitled to claim your total out-of-pocket medical expenses incurred in correcting your medical disease in the 20XX-YY year under the Net Medical Expenses Tax Offset (NMETO)?
Answer
No.
Question 2
Are your items disability aids in respect to the requirements of the NMETO?
Answer
No.
This ruling applies for the following periods:
Year ending 30 June 20YY
The scheme commences on:
1 July 20XX
Relevant facts and circumstances
You suffered large amounts of damage to your mouth and jaw. You were advised that your remaining teeth needed to be removed.
You had medical aids made to replace your teeth.
Without the medical aids you would not be able to eat properly and thus sustain yourself.
You would also be unable to form your words properly and therefore you would be unable to communicate properly. This is an essential requirement for your job which involves interacting with a range of clients on a daily basis.
Your medical aids allow you to see and conduct your work.
You had an amount of out-of-pocket expenses relating to the medical aids as well as the procedures in relation to them.
Relevant legislative provisions
Income Tax Assessment Act 1936 Section 159P
Reasons for decision
Summary
You will not be able to claim NMETO for the 20XX-YY income period as you do not meet the requirements of section 159P of the Income Tax Assessment Act 1997 (ITAA 1997).
Reasoning
Section 159P of the ITAA 1997 provides the conditions for claiming the NMETO. As of 1 July 20YY you are only able to claim the NMETO if you have claimed the offset in the 20WW-XX and 20XX-YY income periods. The exception to this is if the expense relates to an aid for a person with a disability, relates to a service rendered by a person as an attendant of a person with a disability or relates to care provided by an approved provider under the Aged Care Act 1997.
You stated that you did not claim the NMETO in the 20WW-XX and 20XX-YY income periods and thus you do not meet that condition. However, there are still the other three criteria which you can meet. You will not meet the requirement of a service rendered by a person as an attendant of a person with a disability and your expenses are not related to care provided by an approved provider. This means that the expenditure for your medical aids would have to meet the definition of a disability aid.
The schedule 3 of the explanatory memorandum for the Tax and Superannuation Laws Amendment (2014 Measures No. 1) Act 2014 provides some overview as to what a disability aid is. The act states:
Whether an expense is related to disability aids, attendant care or aged care will largely be a matter of fact and circumstance. During the phase-out period, additional guidance will be provided by the Australian Taxation Office to assist people with determining whether their expense is eligible to be claimed under the NMETO
The concept of a disability aid, for the purpose of these amendments, is intended to mean an instrument, apparatus, assistance device or any other item of property that is manufactured as, distributed as, or generally recognised to be, an aid to the function or capacity of a person with a disability.
This provides examples of aids such as wheel chairs or maintenance of guide dogs and as such items do not meet this definition. Furthermore, example 3.6 states:
When completing his tax return for the 2014-15 income year Ross determines that he is unable to claim the NMETO for that year because he did not receive an amount of the NMETO in the 2013-14 income year (as his expenses were under the relevant thresholds for that year) and because his medical expenses for the 2014-15 income year were for major dental work and not related to disability aids, attendant care or aged care.
There is no doubt that you had an illness which caused you to need surgery and require medical aids, however, for the purposes of the NMETO your medical aids will not be a disability aid.
Similarly, prescription medical aids are not a disability aid for the purposes of the NMETO.
Therefore your out-of-pocket medical aids expenses are not eligible medical expenses or disability aids for the purposes of the NMETO and you are not entitled to make a claim.
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