Edited version of private ruling

Authorisation Number: 1011610210862

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Ruling

Subject: Medical expenses tax offset

1. Can you include in a claim for a medical expenses tax offset, the expenses for the installation of hand rails and a shower chair?

Yes.

2. Can you include in a claim for a medical expenses tax offset, the expenses for the installation of special non-slip flooring, a stepless shower and easy to turn bathroom taps?

No.

This ruling applies for the following period

Year ended 30 June 2010

Year ended 30 June 2011

The scheme commenced on

1 July 2009

Relevant facts

You have a medical condition that causes coordination problems.

One of the symptoms of this condition is coordination problems.

Your doctor referred you to an occupational therapist (OT) from a hospital.

The OT visited your house and conducted an investigation. They found that your home required certain work to be completed to assist you in managing your illness.

The modifications made to your home included:

· hand rails in the toilet

· hand rails in the shower

· hospital grade non slip flooring

· new taps in the shower

· stepless shower, and

· shower chair.

The work was completed by a company that only performs this kind of work and only under referral from the hospital OT Department.

The upgrade to your bathroom facilities was necessary to help you perform the activities of daily living.

The non slip flooring is marketed as 'used in hospitals'.

The stepless shower allows you to shower more independently.

The rails in the shower and toilet are an aid to sitting and standing

New taps of a type which you are actually able to turn on were installed. As a consequence of your condition, you were becoming less able to turn conventional taps.

Without the modifications to your home you would struggle to perform your daily activities.

Relevant legislative provisions

Income Tax Assessment Act 1936 Section 159P

Income Tax Assessment Act 1936 Subsection 159P(4)

Reasons for decision

Summary

You are entitled to include in a claim for a medical expenses tax offset, the expenses for the installation of the hand rails and the shower chair as they are eligible medical expenses but you are not entitled to include the remaining expenditure in your offset calculation.

Detailed Reasoning

Section 159P of the Income Tax Assessment Act 1936 (ITAA 1936) provides that a tax offset is allowable to a taxpayer whose net medical expenses (that is, medical expenses less any amount paid or payable by Medicare or a private health fund) in the year of income exceed a certain threshold.

For the year ended 30 June 2010, the amount of the tax offset is calculated as 20% of the excess of net medical expenses over the threshold of $1,500.

To qualify for the tax offset, the medical expenses must be paid by a taxpayer who is an Australian resident, in respect of themselves or in respect of a dependant who is also a resident.

The term medical expenses is defined in subsection 159P(4) of the ITAA 1936. Paragraph (f) of the definition includes payments in respect of a medical or surgical appliance prescribed by a legally qualified medical practitioner.

Taxation Ruling TR 93/34 explains the meaning of a medical or surgical appliance for the purposes of the medical expenses tax offset. The ruling states that a 'medical or surgical appliance' is an instrument, apparatus or device which is manufactured as, or distributed as, or generally recognised to be an aid to the function or capacity of a person with a disability or an illness.

This definition looks to the character of the appliance, not the purpose for which it is prescribed or used. It is not sufficient that a medical practitioner prescribes an appliance for medical or surgical ends. To be a medical or surgical appliance an item must be manufactured as, or distributed as, or generally recognised to be an aid to a person's function or capacity.

TR 93/34 states that generally, a household or commercial appliance is not a medical or surgical appliance.

The hand rails and shower chair are devices which are manufactured as and distributed as aids to the function or capacity of a person with a disability or illness. Therefore, these items are medical or surgical appliances for the purposes of the medical expenses tax offset.

However, the new taps, non slip flooring and stepless shower are not considered to be medical or surgical appliances. This is because they are not manufactured as, or distributed as, or generally recognised to be an aid to the function or capacity of a person with a disability or illness. These items have a conventional household use. They are designed for use by the general population rather than specifically as an aid for use by persons suffering a disability or illness.

In summary, you are entitled to include in a claim for a medical expenses tax offset, the expenses for the installation of the hand rails and the shower chair but you are not entitled to include the remaining expenditure in your offset calculation.