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Ruling

Subject: Medical expense tax offset

Question

Do expenses including installation of a shutter and air conditioner, purchase of a pressure care mattress and renovations to your home qualify as medical expenses for the purpose of the medical expense tax offset?

Answer

No.

This ruling applies for the following periods:

Year ended 30 June 2005

Year ended 30 June 2006

The scheme commences on:

1 July 2004

Relevant facts and circumstances

You are an Australian resident.

You became ill.

You are confined to a wheelchair.

You receive ongoing assistance to manage your condition.

You incurred costs in relation to:

· installation of a shutter

· concreting your driveway for wheelchair access

· renovation of the ensuite, study and kitchen to accommodate wheelchair access

· ramps for front and rear door access to the house

· pressure care mattress

· air conditioning in main bedroom

Relevant legislative provisions

Income Tax Assessment Act 1936 Section 159P.

Reasons for decision

Summary

A medical or surgical appliance will qualify for the medical expense tax offset if it 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. It is not sufficient that a medical practitioner prescribes an appliance for medical or surgical ends, and that generally, a household or commercial appliance is not a medical or surgical appliance. The expenses are not regarded as medical expenses for medical expense tax offset purposes.

Detailed reasoning

A medical expenses tax offset is available to a taxpayer under section 159P 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.

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

Medical expenses are defined in subsection 159P(4) of the ITAA 1936 to include expenses in respect of a medical or surgical appliance prescribed by a legally qualified medical practitioner.

Taxation Ruling 93/34 (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. TR 93/34 states that it is not sufficient that a medical practitioner prescribes an appliance for medical or surgical ends, and that generally, a household or commercial appliance is not a medical or surgical appliance.

Paragraph seven of TR 93/34 includes also that the mere fact that an item gives therapeutic treatment, in that relieves, heals or prevents a medical condition, does not make it a medical or surgical appliance.

Paragraph eight of TR 93/34 includes the following among the examples of a 'medical or surgical appliance': bath seats used by invalids or aged persons, car controls for the disabled, crutches, hearing aids, neoprene bandages/wraps to provide support, invalid chairs and wheel chairs. While the list is not exhaustive and does not include all items which qualify as a 'medical or surgical appliance', it gives guidance as to the types of items which qualify.

Shutter

A shutter to reduce heat is not a medical or surgical appliance. A shutter is not 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. They are designed for use by the general population rather than specifically as an aid for use by persons suffering a disability or illness. It, therefore, does not qualify as a medical expense.

Your renovations (ensuite, bedroom, study, kitchen, air conditioning, driveway and ramps)

The other costs that you have incurred in modifying your home to accommodate your needs do not qualify as 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.

The driveway and ramps installed by you are also not considered to be a medical or surgical appliance. Therefore, you will not be able to include any of the costs associated with the access ramps as an expense for the purposes of the medical expenses tax offset under section 159P of the ITAA 1936. Paragraph nine of TR 93/34 provides a list of examples of what is not considered to be a medical or surgical appliance. Listed among them are wheelchair ramps.

Although the alterations to your home will facilitate the use of your wheelchair at home, the expenditure for these modifications does not fall within the definition of 'medical expenses' for the purpose of the medical expenses tax offset.

Pressure care mattress

As mentioned above, in considering whether an item is a medical or surgical appliance, it is the character of the item which is determinative, not the purpose for which it is prescribed or used. While it is acknowledged that the mattress may aid the function of a person with a disability or illness, the items themselves retain their domestic function of being a place to sleep in a household setting. The character remains in essence pieces of household furniture, and are not medical or surgical appliances.

Therefore the expenditure for the bed and the pressure care mattress are not eligible medical expenses.