Edited version of private ruling

Authorisation Number: 1011713829665

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Ruling

Subject: Medical expenses tax offset

Question

Are you entitled to include the conversion cost of converting your motor vehicle for your child's wheelchair access and transport needs as an eligible medical expense for the purposes of the medical expenses tax offset?

Answer:

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 purchased a vehicle specifically for your child who has severe illnesses.

The vehicle includes a hydraulic wheelchair hoist and wheelchair restraints and you paid approximately $20,000 more than the maximum "redbook" value ("redbook" provides information about car values) for the car.

You believe that the wheelchair modification was carried out at a cost of approximately $20,000.

The cost does not include the extra modifications you carried out to place extra seating or air bags in the suspension to carry the extra weight of the hoist and electric wheelchair, after you purchased the vehicle.

Your child uses an electric wheelchair which cannot be lifted into a vehicle and your child weighs in excess of 50kg and is unable to stand or walk.

Relevant legislative provisions

Income Tax Assessment Act 1936 Subsection 159P(1) and

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.

The medical expenses tax offset is 20% of the amount by which the net medical expenses exceed the relevant threshold for the income year. The relevant threshold for the 2010 income year was $1,500.

The term 'medical expenses' is defined in paragraph 159P(4)(f) of the ITAA 1936 to include payments 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, distributed or generally recognised as an aid to the function or capacity of a person with a disability or an illness.

Taxation Ruling 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.

Your 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.

Consequently, the expenses incurred by you in purchasing the modified car do not qualify as medical expenses for the purposes of section 159P of the ITAA 1936.