Edited version of private ruling

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Ruling

Subject: medical expenses offset-gluten free food

Question

Can you include the costs of special dietary food as a medical expense in calculating the medical expenses tax offset?

Answer

No.

This ruling applies for the following period

Year ended 30 June 2010

The scheme commenced on

1 July 2009

Relevant facts

You have a number of family members diagnosed as suffering from a disease.

You were advised by your doctor they must follow a special diet for the rest of their lives.

You purchase special dietary foods from a variety of places such as supermarkets and health food stores.

Reasons for decision

Summary

The costs incurred in purchasing special dietary food do not meet the definition of a medical expense for the purposes of the medical expenses tax offset. Therefore you cannot include them in calculating your eligibility for the medical expenses tax offset.

Detailed reasoning

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 for themselves or a dependant who is an Australian resident.

Medical expenses are defined in subsection 159P(4) of the ITAA 1936 to include payments to a legally qualified medical practitioner, nurse or chemist, or a public or private hospital in respect of an illness or operation.

If however, medication was purchased from other outlets (for example a health food store or supermarket), the expenses will only qualify as a medical expense if the treatment is therapeutic and administered by direction of a legally qualified medical practitioner.

In Case R95 84 ATC 633; (1984) 27 CTBR (NS) Case 148, the taxpayer claimed as a medical expense the purchase of gluten free bread mix and cornflower. The evidence presented to the court was that both the taxpayer and his dependant son suffered from a medical condition known as coeliac disease.

The taxpayer and his son, in consequence of advice given to them by hospital authorities and also by legally qualified medical practitioners, had abstained from using products or prepared foodstuffs which contain gluten. Their diet included bread, scones and pastries which are made with a special gluten-free bread mix, and casseroles, sponge cakes, etc. which rely for the thickening process upon the use of gluten-free cornflour.

The claim was presented on the grounds that the expenditure was in relation to therapeutic treatment. The Board of Review did not see that to be the case and, in any event, the use of substitute foods was not administered by direction of a legally qualified medical practitioner. Consequently, the Board rejected the claim.

The Board of Review considered that the term 'therapeutic treatment' as used in subsection 159P(4) involves the exercise of professional skill in the medical field in a way which normally involves the person administering the treatment using chemical agents, drugs or physical or mental processes of one kind or another for the purpose of curing or managing the disease.

The Board concluded:

that abstinence in itself from particular foodstuffs (which we understand was the only action taken in the relevant period in the management of the disease suffered by the taxpayer and his son), could not, and did not, give rise to the expenses which form the basis of the taxpayer's claim. The evidence does not suggest that the substitute gluten-free food referred to earlier was a requirement in the management of the disease. It does not suggest either, that the substitute food should take the form in which it was in fact consumed.

In your situation, you have purchased special dietary foods. The dietary modifications have been advised by your doctor. We consider your case to be similar to the circumstances in Case R95.

While we acknowledge the cost of special dietary foods is far greater than the basic food equivalent, the cost of purchasing these foods does not fall within the definition of medical expenses as therapeutic treatment. As such, you are not entitled to include these items when calculating your entitlement to a medical expenses tax offset.