Edited version of private ruling

Authorisation Number: 1011682238116

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Ruling

Subject: Medical expenses tax offset

Question

Can the expenses for the rhinoplasty septal reconstruction and bilateral turbinoplasty surgery be included as medical expenses for the purpose of calculating the medical expenses tax offset?

Answer

Yes

This ruling applies for the following period:

Year ended 30 June 2010

The scheme commences on:

1 July 2009

Relevant facts and circumstances

You suffered significant trauma which had deviated your already severely narrow nose. As a result, you were unable to breath, let alone undertake any exercise. This altered your life style.

You underwent surgery in order to fix the functionality of your breathing.

The surgery was not for cosmetic purposes but to allow you to breathe and improve your quality of life.

The surgery was performed by an ear, nose and throat specialist. You provided a letter from the surgeon.

Only a small portion of the expense was rebated by Medicare.

Your private health covered the anaesthetist's fees.

You paid the hospital expenses which included the bed.

Reasons for Decision

A medical expense tax offset is available under section 159P of the Income Tax Assessment Act 1936 (ITAA 1936), where a taxpayer incurs medical expenses in an income year for themselves or a dependant who is an Australian resident. The tax offset is 20% of the amount by which the net medical expenses exceed the 'rebatable amount' set down for a year of income.

Net medical expenses are the medical expenses you have paid less any refunds you received, or could receive, from Medicare or a private health fund.

Subsection 159P(4) of the ITAA 1936 operates to allow a medical expenses tax offset for payments to a legally qualified medical practitioner, nurse or chemist, or a public or private hospital, in respect of an illness or operation. However, you are not entitled to a tax offset for medical expenses which are ineligible medical expenses.

Subsection 159P(4) of the ITAA 1936 defines ineligible medical expenses as payments to a legally qualified practitioner, nurse or chemist, or a public or private hospital, in respect of a cosmetic operation that is not a professional service for which a Medicare benefit is payable under Part II of the Health Insurance Act 1973.

Where an operation is cosmetic and no Medicare benefit is payable the expenses cannot be included in a medical expenses tax offset claim.

In your case, you had surgery to correct a nasal problem. The procedures carried out gave you functional improvement with your breathing and improved your quality of life. The procedures done by the surgeon were not for cosmetic purposes. Some of the expenses incurred were rebatable by Medicare while other expenses were paid by your private health fund. You paid all expenses for the hospital bed.

Therefore, the expenses incurred by you which were not and are not rebatable by Medicare or your private health fund are eligible medical expenses and consequently can be included in calculating your medical expenses tax offset.