Edited version of private ruling

Authorisation Number: 1011596915926

This edited version of your ruling will be published in the public Register of private binding rulings after 28 days from the issue date of the ruling. The attached private rulings fact sheet has more information.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. Contact us at the address given in the fact sheet if you have any concerns.

Ruling

1. Are you entitled to a medical expenses tax offset for the cost of purchasing a modified car capable of carrying a passenger seated in a wheelchair?

No.

2. Are you entitled to claim the dependant invalid relative tax offset?

No.

This ruling applies for the following period

Year ended 30 June 2010.

The scheme commenced on

1 July 2009.

Relevant facts and circumstances

You have a dependent child who is wheelchair bound as a result of a medical condition.

Your child is less than 16 years of age.

You purchased a second hand modified car that is capable of carrying a passenger seated in a wheelchair.

Relevant legislative provisions

Income Tax Assessment Act 1936 Subsection 159J(1)

Income Tax Assessment Act 1936 Subsection 159J(2)

Income Tax Assessment Act 1936 Subsection 159J(6)

Income Tax Assessment Act 1936 Subsection 159P(1)

Income Tax Assessment Act 1936 Subsection 159P(4)

Income Tax Assessment Act 1936 Paragraph 159P(4)(f)

Reasons for decision

A medical expenses tax offset is available to a taxpayer under subsection 159P(1) of the Income Tax Assessment Act 1936 (ITAA 1936) where the taxpayer pays medical expenses in an income year for themselves or a dependant who is an Australian resident, to the extent that they are not reimbursed, or are eligible to be reimbursed, from a government or public authority or a society, association or fund.

The medical expenses tax offset is 20% of the amount by which the net medical expenses exceed $1,500 in the 2009-10 income year. Please note that the threshold amount may change in future income years.

Subsection 159P(4) of the ITAA 1936 defines medical expenses which are eligible for the medical expenses tax offset. Paragraph (f) of the definition of 'medical expenses' in subsection 159P(4) of the ITAA 1936 includes payments made in respect of a 'medical or surgical appliance' prescribed by a legally qualified medical practitioner.

Taxation Ruling TR 93/34 describes a 'medical or surgical appliance' as being an instrument, apparatus or device which is manufactured as, distributed as; or generally recognised as an aid to the function or capacity of a person with a disability or an illness.

TR 93/34 also provides that generally a household or commercial appliance is not a 'medical or surgical appliance' and that we need to look at the character of the appliance, not the purpose for which it is prescribed or used.

In your case, you purchased a second hand car which was modified to carry a person seated in a wheelchair as a passenger.

The modified car is a means of private transport and it retains its character as a passenger vehicle. While it allows your child to travel in their wheelchair in more comfort, safety and at their convenience it does not replace or alleviate an absent or impaired bodily function. It is not an aid to function and capacity within the meaning of a medical or surgical appliance.

The character of the modified car is not altered if its purchase was recommended by a legally qualified medical practitioner.

Consequently, the expenses incurred by you in purchasing the modified car do not qualify as medical expenses for the purposes of the medical expenses tax offset.

Invalid relative tax offset

Subsection 159J(1) of the ITAA 1936 provides that a dependant tax offset is allowed where a taxpayer contributes to the maintenance of a person specified in column 2 of the table in subsection 159J(2) of the ITAA 1936, and that person is a resident of Australia.

An invalid relative is listed as a dependant in the table.

Subsection 159J(6) of the ITAA 1936 provides the definition of an invalid relative as a person who is not less than 16 years of age and is a child, brother or sister of the taxpayer, being a person:

· to whom a disability support pension or a special needs disability support pension is being paid under the Social Security Act 1991, or

· in respect of whom the taxpayer obtains a certificate issued by a medical officer of the Health Department, or by a medical practitioner appointed by the Families Secretary for the purpose of examining claimants for disability support pensions under that Act, certifying that the person has a continuing inability to work within the meaning of Part 2.3 of that Act.

In your case, as your dependent child is less than 16 years of age, you are not eligible to claim the dependant invalid relative tax offset.