Edited version of private ruling

Authorisation Number: 1011771981299

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Ruling

Subject : Education tax refund and medical expenses tax offset

Question 1

Does the cost of a hearing and central auditory processing test qualify as an eligible education expense for the purposes of the education tax refund (ETR)?

Answer

No.

Question 2

Does the cost of a hearing and central auditory processing test qualify as an eligible medical expense for the purposes of the medical expenses tax offset?

Answer

Yes.

This ruling applies for the following period:

Year ending 30 June 2011

The scheme commences on:

1 July 2010

Relevant facts and circumstances

Your child is completing secondary school studies.

Your child has been diagnosed as having a disorder.

You have provided a copy of a referral from a legally qualified medical practitioner, for your child to attend a specific practice for medical tests. These tests are required annually to document your child's development progress.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 61-640
Income Tax Assessment Act 1936 Section 159P
Income Tax Assessment Act 1936 Subsection 159P(4)

Detailed reasoning

Education Tax Refund

For the purposes of the ETR eligible education expenses are items that support a child's or independent student's primary or secondary school education. They include the purchase, lease, hire or hire-purchase costs, repairs and running costs of: (section 61-640 of the Income Tax Assessment Act 1997).

· laptops, home computers and associated costs

· computer-related equipment such as printers, USB flash drives, and accessories designed and manufactured solely or predominantly for use with a laptop or home computer - for example laptop bags and wireless mouse

· disability aids to assist in the use of computer equipment for students with special needs

· home internet connections, including the costs of establishing and maintaining them

· computer software for educational use

· word processing, spreadsheet, database and presentation software, internet filters and antivirus software

· school textbooks and other paper-based school learning material, including prescribed textbooks, associated learning materials, study guides and stationery - for example, pencils, pens, compasses and glue

· prescribed trade tools - for example, tools required to complete a school-based apprenticeship.

Expenses which do not fall under the above categories are not eligible expenses for the purposes of the ETR.

Medical tests do not meet the definition of eligible education expenses. Therefore, the cost associated with the assessment of your child's disorder does not qualify as an eligible expense for the purposes of the ETR.

Medical expenses

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 $1,500 for the 2010-11 income year.

Therapeutic treatment

Paragraph (d) of the definition of medical expenses in subsection 159P(4) of the ITAA 1936 includes payments made for therapeutic treatment administered by direction of a legally qualified medical practitioner.

It was held in Case A53 69 ATC 313; 15 CTBR (NS) Case 30 that the mere suggestion or recommendation by a medical practitioner that the patient undergoes therapeutic treatment is not sufficient for the payment to qualify as medical expenses. The patient would have to be referred by a medical practitioner to a particular person for specific treatment.

The general concept of therapeutic treatment is healing or curing, rather than preventing the need for therapy. Therapeutic treatment involves the exercise of professional skill in the medical filed in a way that normally involves the person administering the treatment using drugs or physical or mental processes of one kind or another of purpose of curing or managing a disease.

Although the treatment must be administered by direction of a legally qualified medical practitioner, the treatment need not be administered by such a practitioner.

In your case, you have been referred by a legally qualified medical practitioner, to a specific practice for an assessment of your child's disorder. The tests are required on an annual basis to determine the extent to which your child has been affected by the disorder.

As a legally qualified doctor prescribed the tests, they qualify as eligible medical expenses for the purposes of the medical expense tax offset, and you are entitled to include the cost in your calculation of the medical expenses tax offset.