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Ruling

Subject: medical expenses tax offset

Question

Is your child a dependant for the purposes of the medical expenses tax offset?

Answer:

No.

This ruling applies for the following periods

Year ended 30 June 2011

Year ending 30 June 2012

The scheme commenced on

1 July 2010

Relevant facts and circumstances

You have paid for your child who is over the age of 25 to have dental treatment.

Your child is married with children and in reduced financial circumstances. Your child works occasionally on a casual basis.

The cost of the dental work was over the threshold for the financial year with follow up treatments also required.

You deposited the money into your child's account and they paid the dental bill.

You are requesting that in your child's case they are treated as your dependant in these circumstances, as they depended on your financial assistance to undergo essential medical treatment.

Relevant legislative provisions

Income Tax Assessment Act 1936 Subsection 159P(4) and

Income Tax Assessment Act 1936 Section 159J.

Reasons for decision

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 the taxpayer or any other person is not reimbursed, or are eligible to be reimbursed, from a government, public authority, society, association or fund.

The medical expenses tax offset is 20% of the amount by which the net medical expenses exceed $2,000 for the 2010-11 financial year or $2,060 for the 2011-12 financial year.

Under subsection 159P(4) of the ITAA 1936, a 'dependant' for the purposes of the medical expenses tax offset is defined as including:

o The spouse of the taxpayer

o A child of the taxpayer less than 21 years old

o Any other child under 21 years old whom the taxpayer maintained who was not a student and who meets certain income thresholds

o A student under 25 years old whom the taxpayer maintained and who meets certain income thresholds

o A child who kept house for the taxpayer full time and for whom the taxpayer is entitled to claim a child-housekeeper tax offset

o An invalid relative, parent or spouse's parent for whom the taxpayer is entitled to claim a dependant tax offset

The definition of 'invalid relative' in section 159J of the ITAA 1936 states that the person must be a recipient of a disability support pension or is certified as having a continuing inability to work for the purposes of the Social Security Act 1991.

Your child does not fall within the definition of dependant contained in subsection 159P(4) of the ITAA 1936. Therefore, your child is not a dependant for the purposes of the medical expenses tax offset. Consequently, you are not able to claim a medical expenses tax offset for any of their medical or dental expenses.

While we understand that you are contributing a considerable amount to your child's dental treatment, the Commissioner has no discretion to consider them your dependant for the purposes of the medical expenses tax offset.