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Ruling

Subject: Medical expense Tax Offset

Question 1

Can the costs of your personal home care attendants be included as a medical expense in the calculation of a medical expenses tax offset?

Answer

No

Question 2

Can the costs of your spouse's personal home care attendants be included as a medical expense in the calculation of a medical expenses tax offset?

Answer

Yes

This ruling applies for the following period:

Year ended 30 June 2011

The scheme commences on:

1 July 2010

Relevant facts and circumstances

You and your spouse are Australian residents for income tax purposes.

You both suffer from a medical condition plus other physical problems.

You were both first assessed for low level care.

You were both again assessed and are eligible to receive residential high level care and are on a waiting list for a subsidised care package.

Rather than be placed in hostel accommodation you stay within your home through the involvement of family members and by employing private care providers and community aid nursing.

You both require assistance with meals, medication, physical supervision and personal hygiene.

You both have been receiving services from a care provider.

In addition you use the services of another care provider that provide a low cost service for checking on you and changing of bandages.

All payments are made direct to the providers and the carers are employees of the providers who are paid a salary.

The carers are accredited to provide care with some being retired nurses.

Copies of invoices from both providers have been provided and there is no administration fees listed on the invoices.

You do not receive any reimbursement from Medicare or a private health fund.

Relevant legislative provisions

Income Tax Assessment Act 1936 Subsection 159P(1)

Income Tax Assessment Act 1936 Subsection 159P(4)

Income Tax Assessment Act 1936 Subsection 159P(5)

Reasons for decision

Summary

The fees paid to your carer providers for personal care visits do not qualify as medical expenses and cannot be included in your net medical expenses for the purposes of the medical expenses tax offset.

However, the fees paid to your spouse's providers for personal care visits qualify as medical expenses and can be included in the net medical expenses for the purposes of the medical expenses tax offset.

Detailed reasoning

A medical expenses tax offset is available under section 159P of the Income Tax Assessment Act 1936 (ITAA 1936), where you paid for medical expenses in an income year for yourself or a dependant whilst 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) in an income year exceeds the threshold amount.

Medical expenses are defined in subsection 159P(4) of the ITAA 1936 and includes the following paragraphs :

(a) payments to a legally qualified medical practitioner, nurse or chemist, or a public or private hospital, in respect of an illness or operation and,

(h) payments as remuneration of a person for services rendered by them as an attendant of a person who is legally blind or permanently confined to a bed or an invalid chair.

Subsection 159P(5) of the ITAA 1936 extends that definition to include employers (not being a public or private hospital) of relevant persons in respect of the provision of services or treatment by the relevant person, shall be taken to be a payment made to the relevant person.

The term 'illness' is not defined in the ITAA 1936 and therefore it is necessary to look at the ordinary meaning of the term. An illness includes a sickness, disease, or disorder of the body or the mind and involves a deviation from the normal healthy state.

You and your spouse suffer from a serious condition and have been assessed for daily home care. You and your spouse employ registered home carers who assist you both in daily living. These carers are not qualified nurses. You are not legally blind but your spouse is blind. You are both not permanently confined to a bed or an invalid chair.

Your circumstances

You do not satisfy the criteria in paragraph (a) of the definition of medical expenses as your carers are not qualified medical practitioners or nurses. In addition, you do not satisfy the criteria in paragraph (h) of the definition of medical expenses as you are not blind or permanently confined to a bed or invalid chair.

Therefore you are not entitled to include the expenses of your personal home care in the calculation of a medical expenses tax offset.

Your spouse's circumstances

As your spouse is blind, the payments you make to your carer qualify under paragraph (h) as medical expenses for the purposes of the medical expenses tax offset.