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Ruling

Subject: Medical expenses tax offset

Question:

Are you entitled to include the medical fees and medical or surgical appliance expenses in your calculation of the medical expenses tax offset?

Answer: Yes

This ruling applies for the following periods:

Year ended 30 June 2011

Year ending 30 June 2012

Year ending 30 June 2013

Year ending 30 June 2014

The scheme commenced on:

1 July 2010

Relevant facts

A family member has an illness.

The family member's medical practitioner referred them to a medical educator for assistance in stabilising their illness. You incur a fee for this service.

Following recommendation from the medical practitioner and consultation with the medical educator, your family member underwent surgery to be fitted with an insulin pump.

You incur expenses on the following items in the use/maintenance of the insulin pump:

· cannulation and tubing

· syringes (cartridges)

· antiseptic wipes

· batteries for the insulin pump

· Emla anaesthetic cream

· Tegaderm (clear plastic skin)

· postage and handling for supplies.

Due to certain reasons, the family member's medical practitioner has referred them to a psychologist. You incur fees for these services.

In the management of the family member's illnesses you have also incurred the following expenses:

· the purchase of a new Glucometer

· disc batteries for the Glucometer

· Glucometer and keytone strips (for measuring blood glucose and blood keytone levels)

· wrist and neck medical alert bracelets.

Relevant legislative provisions

Income Tax Assessment Act 1936 Section 159P.

Income Tax Assessment Act 1936 Subsection 159P(4)

Reasons for decision

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 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. Relevant to your situation are payments:

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

· in respect of a medical or surgical appliance (not otherwise specified in this definition) prescribed by a legally qualified medical practitioner.

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

The term 'therapeutic treatment' contemplates that the treatment administered by the medical practitioner is directed towards the cure of the ill patient or management of the patient's illness. A mere suggestion or recommendation by a doctor to a patient that the patient undergo therapeutic treatment is not enough for the associated expenses to qualify as medical expenses. The patient must be referred to a particular person for the administered therapeutic treatment (Case A53 69 ATC 313).

Medical educator and psychologist

The family member's medical practitioner has provided referrals to these professionals. Therefore, if you incur fees for therapeutic treatment from the medical educator and psychologist in the management of your family member's illness, these expenses are eligible to be included in the calculation of the medical expenses tax offset.

Payments in respect of a medical or surgical appliance prescribed by a legally qualified medical practitioner

Taxation Ruling TR 93/34 explains the meaning of a 'medical or surgical appliance' as an instrument, apparatus or device which is manufactured as, distributed as, or generally recognised to be an aid to the function or capacity of a person with a disability or illness.

Paragraph 4 of TR 93/34 states that an appliance is an aid to function or capacity if it helps the person with the disability or illness perform the activities of daily living. The definition requires looking to the character of the appliance, not the purpose for which it is prescribed or used. It is not sufficient that a medical practitioner prescribes an appliance for medical or surgical ends. To be a medical or surgical appliance an item must be manufactured as, distributed as, or generally recognised to be an aid to a person's function or capacity.

Paragraph 8 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 wheelchairs. 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.

Paragraph 7 of TR 93/34 states 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.

Glucometer and Medical alert bracelets

The glucometer and medical alert bracelets meet the requirements of a medical or surgical appliance as they are both an apparatus which is recognised as an aid to the function or capacity of a person with a disability or illness. Therefore, if you incurred a further expense in purchasing these items, the expenditure will qualify as an eligible medical expense and can be included in the calculation of the medical expenses tax offset.

Cannulation and tubing, syringes, antiseptic wipes, batteries, Emla anaesthetic cream, Tegaderm, glucometer and keytone strips, postage and handling

You will incur expenditure on cannulation and tubing, syringes, antiseptic wipes, batteries, Emla anaesthetic cream, Tegaderm, glucometer and keytone strips and postage and handling. These are items that are used in/with your family member's insulin pump or glucometer.

Previous case law has interpreted the phrase "payments in respect of a medical or surgical appliance", as being wide enough to cover maintenance or repair as well as its original cost (Case F25 74 ATC 130 at 132).

The expenditure you incur on these items is therefore considered to be payments in respect of a insulin pump and glucometer (medical or surgical appliances). As a result these items are considered eligible medical expenses and can be included in the calculation of the medical expenses tax offset.