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Ruling
Subject: eligibility for medical expenses tax offset
Question 1
Can the cost of the nappies you purchase from a chemist for your child's use be included 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
01 July 2010
Relevant facts and circumstances
Your child suffers from the medical condition and has several disorders including incontinence.
A letter from the child's doctor confirms the medical condition and because of the medical condition your child has to wear nappies.
You purchase special medical nappies. They are an all-in-one incontinence brief designed for use by older children and they meet the specific needs of your child.
You purchase these nappies by special order from a chemist.
Relevant legislative provisions
Income Tax Assessment Act 1936 Section 159P
Reasons for decision
A medical expenses tax offset is available under section 159P of the Income Tax Assessment Act 1936 (ITAA 1936), where you incur medical expenses in an income year for yourself or a dependant who is an Australian resident to the extent that they are not reimbursed, or are eligible to be reimbursed, from a government or public authority or a 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.
Medical expenses are defined in subsection 159P(4) of the ITAA 1936 and paragraph 159P(4)(a) includes payments made to a legally qualified medical practitioner, nurse or chemist, or a public or private hospital, in respect of an illness or operation.
The meaning of the term illness was discussed by Taxation Board of Review No.3 in Case Q21, 83 ATC 77: Case 85 26 CTBR (NS) 570. Dr Gerber (Member) stated that the term includes any condition marked by a pronounced deviation from the normal healthy state.
Paragraph 6 of Taxation Ruling IT 2146 states that claims should be accepted where the taxpayer has provided evidence from a legally qualified medical practitioner that the expenditure is in respect of an illness and that the product was purchased from a chemist.
In your case, your child's doctor confirmed your child's medical condition and the need for the use of special medical nappies.
You purchase these nappies from a chemist; therefore the expense you have incurred on nappies qualifies as an eligible medical expense, for the purpose of calculating your medical expenses tax offset.