Edited version of private ruling

Authorisation Number: 1011681103621

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Ruling

Subject: medical expenses

Question 1

Do the cost of purchasing moisturising creams and soap free bath wash, qualify as medical expenses for the purpose of calculating a medical expenses tax offset?

Answer: Yes.

Question 2

Does the cost of purchasing dust mite covers, a high efficiency particulate air (HEPA) vacuum cleaner, low irritant washing liquid and quarterly carpet cleaning, qualify as a medical expense for the purpose of calculating a medical expenses tax offset?

Answer: No.

This ruling applies for the following period

Year ending 30 June 2011

The scheme commenced on

1 July 2010

Relevant facts

Your child has been diagnosed with a medical condition.

Your doctor has specifically asked you to purchase or replace household items in an attempt to eliminate environmental factors that contribute to your child's medical condition including:

· Soap free bath wash

· Moisturisers

· Low irritant washing liquid

· Quarterly carpet cleaning

· Premium grade dust mite covers

· Vacuum cleaner with a HEPA filter

You have supplied a copy of a letter from your doctor.

The soap free bath wash and moisturisers were purchased from a chemist.

Relevant legislative provisions

Income Tax Assessment Act 1936 Section 159P

Reasons for decision

Subsection 159P(1) of the Income Tax Assessment Act 1936 (ITAA 1936) provides that an amount paid by the taxpayer in the year of income as medical expenses in respect of themselves, or in respect of a dependent who is a resident, less any amount paid or entitled to be paid to the taxpayer or any other person, in respect of those medical expenses, shall be treated as a rebatable amount in respect of that year of income.

The rebate is available where net medical expenses in the year exceed $1,500. The amount of the rebate is 20% of the excess over $1,500.

To claim a medical expense tax offset, the expenditure must be an eligible medical expense.

According to paragraph 159(4)(a) of the ITAA 1936, the definition of 'medical expenses' includes payments to a chemist in respect of an illness.

Your child suffers from a medical condition. Their doctor advised you to use moisturising cream to assist and soap free bath wash in controlling their condition. As the items are purchased from a chemist and used in the treatment of an illness, the expenses that you have incurred are eligible medical expenses for the purpose of your medical expenses tax offset.

Medical or surgical appliance

Under paragraph 159(4)(f) of the ITAA 1936, the definition of 'medical expenses' 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 paragraph 159(4)(f) of the ITAA 1936 as an instrument, apparatus or device which is manufactured as, distributed as or generally recognised to be an aid to the function or capacity of a person with a disability or an illness.

To be an aid to function or capacity, the item must help the person with the illness or disability, perform the activities of daily living: paragraph 4 of Taxation Ruling TR 93/34. An item that merely has a therapeutic purpose, such as relieving, healing or preventing a medical condition, is not considered to be a medical or surgical appliance within the meaning of paragraph 159P(4)(f) of the ITAA 1936: paragraph 7 of Taxation Ruling TR 93/34.

Dust mite covers

According to TR 93/34, a 'medical or surgical appliance' for the purposes of paragraph (f) of the definition of 'medical expenses' in subsection 159P(4) is an instrument, apparatus or device which is:

(a) manufactured as; or

(b) distributed as; or

(c) generally recognised to be

an aid to the function or capacity of a person with a disability or illness.

In your case, we accept that the dust mite covers may aid your child's condition but they have not been manufactured, sold specially and or generally recognised as an aid for a person with an illness or disability. As such, the dust mite covers are not considered to be a medical or surgical appliance. Therefore, you are not entitled to include the dust mite covers in calculating a medical expenses tax offset.

Vacuum cleaner, Carpet cleaning and low irritant washing liquid

TR 93/34 provides examples and what are and what are not considered to be medical or surgical appliances. A commercial or household vacuum cleaner is not considered to be a medical or surgical appliance (Paragraph 9 of TR 93/34).

TR 93/34 also states at paragraph 5 that generally, a household or commercial appliance is not a medical or surgical appliance.

While we recognise that the vacuum cleaner needs to have special filtration, they are not manufactured, sold specially and or generally recognised as an aid for a person with an illness or disability.

Additionally, expenditure on carpet cleaning and low irritant washing liquid is not a payment for medical treatment. Although the expenses have been incurred for therapeutic purposes, they are not specifically designed to aid a person with a disability or illness.

Therefore, the expenditure on the vacuum cleaner, carpet cleaning and low irritant washing liquid is not considered to be medical expenses for the purposes of the medical expenses offset.