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Subject: Medical expenses tax offset

Question

Are you able to include nursing home fees as medical expenses for the purposes of the medical expenses tax offset?

Answer

Yes.

This ruling applies for the following periods:

Year ended 30 June 2010

Year ended 30 June 2011

Year ended 30 June 2012

Year ended 30 June 2013

Year ended 30 June 2014

Year ended 30 June 2015

The scheme commenced on:

1 July 2009

Relevant facts and circumstances

You are a resident at a nursing home facility.

The facility is approved under the Aged Care Act 1997.

You were assessed by the Aged Care Assessment Team as an approved care recipient.

Approximately three years ago you were admitted as a low care resident of the nursing home section.

Approximately one year ago your level of care was upgraded to high care.

In addition to personal and nursing care you receive accommodation and food.

Relevant legislative provisions

Income Tax Assessment Act 1936 Section 159P

Reasons for decision

Section 159P of the Income Tax Assessment Act 1936 (ITAA 1936) provides that a tax offset is allowable where you pay medical expenses in an income year for yourself and/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 the annual threshold ($1,500 for the 2009-10 financial year and $2,000 for the 2010-11 and subsequent financial years). The tax offset is 20% of the amount by which the net medical expenses exceeds the annual threshold.

The definition of medical expenses includes payments made to a public or private hospital in respect of an illness or operation. Taxation Ruling IT 261 outlines that a nursing home will be regarded as a hospital for the purposes of subsection 159P(4) of the ITAA 1936 if it is approved under the Aged Care Act 1997. A payment will be accepted for a nursing home for an approved care recipient's permanent or respite care if the payments were made to an approved care provider and if they were for personal or nursing care, not just for accommodation. Accepted residential aged care payments can be for:

· daily fees

· income tested daily fees

· extra services fees, and

· accommodation charges, periodic payments of accommodation bonds or amounts drawn from accommodation bonds paid as a lump sum

In your case you are staying in an approved aged care facility and have been assessed by the Aged Care Assessment Team as an approved care recipient. You are charged a daily accommodation fee and a daily income tested fee. These expenses are included in the list of accepted payments for residential aged care facilities. Therefore the amount that you pay to your nursing home for the daily accommodation fee and the daily income tested fee qualify as medical expenses for the purposes of calculating your medical expenses tax offset.