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Ruling

Subject: Medical expenses tax offset

Question

Does the purchase of a hydro bath qualify as an eligible medical expense for the purpose of the medical expenses tax offset?

Answer: No.

This ruling applies for the following period

Year ended 30 June 2011

The scheme commenced on

1 July 2010

Relevant facts

Your spouse suffers from a medical condition and under the direction of their doctor you purchased a hydro bath to relieve painful sensory symptoms in their lower limbs.

Your spouse uses the hydro bath every second day as it has directional jets which can target specific areas to relieve the pain.

You believe that the hydro bath qualifies as therapeutic treatment under the direction of a doctor.

Reasons for decision

Section 159P of the Income Tax Assessment Act 1936 (ITAA 1936) provides that a tax offset is allowable to a taxpayer whose net medical expenses (that is, medical expenses less any amount paid or payable by Medicare or a private health fund) for themselves and their dependants in the year of income exceed a certain threshold.

The amount of the tax offset is calculated as 20% of the excess of net medical expenses over the threshold for that year.

The term 'medical expenses' is defined in subsection 159P(4) of the ITAA 1936, and includes such payments made:

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

(b) to a legally qualified dentist for dental services or treatment or the supply, alteration or repair of artificial teeth;

(c) to a person registered under a law of a State or Territory as a dental mechanic in respect of charges lawfully made by that person for the supply, alteration or repair of artificial teeth;

(d) for therapeutic treatment administered by direction of a legally qualified medical practitioner;

(e) in respect of an artificial limb (or part of a limb), artificial eye or hearing aid;

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

(g) for:

a. the testing of eyes or the prescribing of spectacles by a person legally qualified to perform these services; or

b. the supply of spectacles in accordance with any such prescription;

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

(i) for the maintenance of a dog used for the guidance or assistance of, but not social therapy for, a person with a disability, being a dog that the Commissioner is satisfied is properly trained in the guidance or assistance of persons with disabilities.

In your case paragraphs (d) and (f) of the definition are relevant.

Payments for therapeutic treatment

In Case R95 84 ATC 633, the Tribunal found that 'therapeutic treatment' necessitated the exercise of professional skill in the medical field in some positive way, which would normally involve the person undertaking the act of administering the treatment using chemical agents or drugs or a physical or mental process of one kind or another in a manner that is directed towards the cure or management of disease or of diseased patients.

The term 'therapeutic treatment' contemplates that the treatment administered by the medical practitioner is directed toward 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).

It is not considered that the cost of purchasing a hydro bath is a payment for therapeutic treatment administered by either a legally qualified medical practitioner or a medically skilled professional who is acting under direction of a legally qualified medical practitioner.

Payments in respect of a medical or surgical appliance

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 7 of TR 93/34 includes also that the mere fact that an item gives therapeutic treatment, in that it relieves, heals or prevents a medical condition, does not make it a 'medical or surgical appliance'.

Paragraph 9 of TR 93/34 states that hydrotherapy pools and spa pools are not considered to be medical or surgical appliances as they are not aids to a person's function or capacity. The fact that the use of them has a therapeutic effect does not change their nature to that of a medical or surgical appliance.

Conclusion

As the purchase of a hydro bath does not meet paragraphs (d) or (f) of the definition of 'medical expenses', this expense cannot be included in the calculation of a medical expenses tax offset.