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Edited version of private ruling
Authorisation Number: 1011665776177
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Ruling
Are the costs associated with surrogacy and egg donation eligible medical expenses?
No.
This ruling applies for the following period
Year ending 30 June 2011
The scheme commenced on
1 July 2010
Relevant facts
Due to continuing problems with infertility, you and your spouse decided to try to conceive a child through the use of third party donor eggs and the services of two surrogates.
This involved travelling overseas and enlisting the services of an IVF clinic.
All procedures are performed by a legally qualified medical practitioner in hospital.
You are responsible for the costs associated with the following matters:-
· egg donor IVF treatment
· the medical costs of the surrogates for becoming pregnant
· the medical costs of the surrogates pregnancy
· the medical costs of the surrogate in relation to the births.
Relevant legislative provisions
Income Tax Assessment Act 1936 Subsection 159P(1)
Income Tax Assessment Act 1936 Subsection 159P(4)
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.
Paragraph (a) of the definition of medical expenses in subsection 159P(4) of the ITAA 1936 includes payments made to a legally qualified medical practitioner in respect of an illness or operation.
Taxation Ruling IT 2359 provides that infertility is an illness within the ordinary meaning of the term and expenses associated with overcoming that illness are medical expenses.
However, subsection 159P(1) of the ITAA 1936 provides that the medical expenses must be paid in respect of the taxpayer, or a dependant of the taxpayer, to qualify for the medical expenses tax offset.
A 'dependant' is defined in subsection 159P(4) of the ITAA 1936 as:
· the spouse of the taxpayer, or
· a child of the taxpayer who is under 21 years of age, or
· a person for whom the taxpayer is entitled to a dependants rebate, or a child or student in respect of whom the taxpayer qualifies for a notional dependants rebate.
As the surrogates and egg donor are not considered to be a dependants, the medical expenses have not been paid in respect of a dependant as defined in subsection 159P(4) of the ITAA 1936.
Therefore, you cannot include any of the costs involved in the IVF treatment, pregnancy and birth costs as part of a calculation for the medical expenses tax offset.