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Ruling

Subject: medical expenses tax offset

Question:

Are you entitled to include the cost of home care in a calculation for medical expenses tax offset?

Answer: No

Relevant facts

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 live in your own home and receive care from a nursing agency.

You have limited mobility and no longer have testamentary capacity. You are dependant on nursing care for day to day function.

Your nursing care is co-ordinated by a Registered Nurse employed by the agency who liaises on a monthly basis with your doctor. The co-ordinating Registered Nurse then directly and indirectly supervises the day to day care provided by agency's palliative care assistants who are assistants with special training and may have certificates in community care, or be retired nurses who no longer have certification.

The care provided by the agency does not include other domestic services such as gardening cleaning and shopping, which is provided by others.

The agency provides:

· A 24 hour/day emergency helpline

· Attendance to hygiene needs daily, as you have incontinence needs and an irritable bowel

· Massaging and exercising your feet and legs each morning to encourage circulation and to give safe exercise as directed by your heart specialist and vascular surgeon

· Inserting and maintaining your hearing aids

· Transport to appointments with health specialists as required

· Providing and supervision of breakfast and main meal in the middle of the day

· Filling dosette and monitoring medications

· Attending to your night time toileting needs to ensure you do not fall

· Providing counselling and family meetings to establish advance directives

· You are reliant on a walking frame and need assistance with transfers.

Reasons for decision

Medical expenses tax offset

Pursuant to section 159P of the Income Tax Assessment Act 1936 (ITAA 1936) a tax offset is available to a taxpayer whose net medical expenses in the year of income exceed the relevant threshold amount. The amount of the offset is 20% of the excess over the threshold. To qualify for the tax offset, the medical expenses must be paid by a resident taxpayer in respect of themselves or a resident dependant. 

For the payments to the agency to qualify as medical expenses for the purposes of the medical expenses tax offset, the expense must fall within the definition of 'medical expenses' as contained in subsection 159P(4) of the ITAA 1936.

Paragraph 159P(4)(a) of the ITAA 1936 includes as a medical expense, 'payments to a legally qualified medical practitioner, nurse or chemist, or a public or private hospital, in respect of an illness or operation.' As your care is not in respect of an illness or operation, and as you are not a resident of a hospital or aged care facility, this does not apply to your case.

The term 'medical expenses' is defined in paragraph 159P(4)(h) of the ITAA 1936,

for the purposes of the medical expenses tax offset, to include payments 'as remuneration of a person for services rendered by him as an attendant of a person who is blind or permanently confined to a bed or an invalid chair'.

The need to employ a person to provide assistance with your daily hygiene, massage and exercise transport to appointments, meal provision and supervision, and monitoring of medication is necessitated by your aged care needs. However, payments for attendant services in your case, since you are neither blind or permanently confined to a bed or an invalid chair would fall outside the scope of paragraph 159P(4)(h) of the ITAA 1936.

Therefore, payments to the agency do not qualify as medical expenses for the purposes of the medical expenses tax offset.