Edited version of private ruling

Authorisation Number: 1011894102929

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Ruling

Subject: Medical Expenses - Therapeutic

Questions & Answers:

1) Are you entitled to a medical tax offset for expenses you incurred for Naturopathy treatment including medicines dispensed by the Naturopath?

Yes.

2) Are you entitled to a medical tax offset for postage costs incurred in relation to your naturopath sending you the prescribed medicines?

No.

This ruling applies for the following period:

Year ended 30 June 2011

 Year ended 30 June 2012

 Year ended 30 June 2013

 Year ended 30 June 2014

The scheme commences on:

1 July 2010

Relevant facts and circumstances

This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling.

You are a resident for income tax purposes.

You have been diagnosed with a chronic illness.

You were referred by your doctor to a naturopath/Chinese medicine practitioner. Your doctor enquires about your treatment by your naturopath whenever you visit.

Standard medical treatments were unable to assist you with your illness but since commencing treatment from the naturopath you have been able to return to work and resume a normal lifestyle.

The naturopathy and Chinese medicinal therapy consists of herbal, homeopathic, traditional Chinese medications and acupuncture.

The medications are dispensed by your naturopath; they are not available over the counter in any health food shop.

You incur postage costs as your naturopath sends you the prescribed medicines by post.

The cost of the treatment is not deductible through Medicare. You are not a member of a health fund.

You have retained all your receipts for your expenses and will continue to do so. These expenses exceeded $2,000 in the 2010/2011 income year and you expect this to continue to be the case.

Relevant legislative provisions

Income Tax Assessment Act 1936 Section 159P.
Income Tax Assessment Act 1936 Subsection 159P(4).

Detailed reasoning

A medical expense tax offset is available to a taxpayer under section 159P of the Income Tax Assessment Act 1936 (ITAA 1936), where the taxpayer incurs medical expenses for themselves or a dependant who is an Australian resident.

The medical expenses tax offset is only available if the amount of medical expenses (reduced by any entitlement to reimbursement from a health fund or government authority) exceeds $2,000 in the income year. The tax offset is 20% of the amount by which the net medical expenses exceeds the relevant amount mentioned for each income year.

Subsection 159P(4) of the ITAA 1936 defines which medical expenses are allowable in the calculation of the offset. Paragraph D is relevant to your situation:

       payments for therapeutic treatment administered by direction of a legally qualified medical practitioner

In your case you have incurred payments in respect to yourself, and the expenses have not been reimbursed.

Consideration must now be given as to whether the medical expenses you have incurred fall under any of the definitions of medical expenses as listed above.

Payments for therapeutic treatment administered by direction of a legally qualified medical practitioner

Case law has established the general concept of therapeutic treatment is healing or curing rather than preventing the need for therapy (Case S2, 85 ATC 102; 17 TBRD Case S8).

In addition, the Administrative Appeals Tribunal found in Case R95 84 ATC 633; Case 148 27 CTBR (NS) 1154 that therapeutic treatment necessitated the exercise of professional skill in the medical field. This would normally involve the person administering the treatment using chemical agents or drugs or some physical and mental processes which are directed towards the cure or management of a disease or ailment.

The therapeutic treatment must be 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.

You were referred by your legally qualified medical practitioner to a specific naturopath for treatment.

In the context of paragraph 159P(4)(a) of the ITAA 1936 therapeutic treatment involves the exercise of professional skill in the medical field in a way which normally involves the person administering the treatment using drugs or physical or mental processes of one kind or another for the purpose of curing or managing disease (Case R95 84 ATC 633;27 CTBR (NS) Case 148).

Furthermore, therapeutic treatment as a concept is concerned with healing or curing, rather than preventing the need for therapy (18 TBRD Case T67; 14 CTBR (NS) Case 31). Although the treatment must be administered by direction of a legally qualified medical practitioner, the treatment need not be administered by such a practitioner.

Naturopathy treatment is regarded as therapeutic treatment as its purpose is to improve circulation, body structure, balance and remove tensions in the body which all assists in managing your condition. As you were referred by your doctor to your naturopath, your naturopathy expenses qualify as medical expenses for the purposes of the medical expense tax offset under section 159P of the ITAA 1936.

The amount of medical expenses tax offset you are entitled to is calculated as follows:

Medical expenses tax offset = 20% x (net medical expenses - $2,000)

Potage costs incurred in relation to your naturopath sending you the prescribed medicines

Medical expenses are defined in subsection 159P(4) of the ITAA 1936 to include payments to a legally qualified medical practitioner, nurse or chemist, or a public or private hospital, in respect of an illness or operation or payments for therapeutic treatment provided the treatment is administered at the direction of a legally qualified medical practitioner. Therapeutic treatment is a healing or curing treatment.

We appreciate your postage cost requirements. However, in view of the explanation above, the expenditure you incur are not medical expenses as defined in subsection 159P(4) of the ITAA 1936 and you are unable to claim the postage costs as part of the medical expenses tax offset.