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Ruling

Subject: Medical expense Tax Offset

Question

Can the cost of purchasing an electric breast pump be included in the calculation of your medical expenses for the purposes of the medical expenses tax offset?

Answer

Yes

This ruling applies for the following period

Year ended 30 June 2012

The scheme commences on

1 July 2011

Relevant facts and circumstances

You are an Australian resident for tax purposes.

Your baby was born prematurely.

Your baby was admitted to an intensive care unit.

You were required to purchase an electric breast pump to supply breast milk for your baby whilst the baby was in intensive care.

Your doctor and medical staff of the hospital discussed and recommended you purchase the breast pump.

You purchased the breast pump from the hospital.

You have not been reimbursed for this expense.

Relevant legislative provisions

Income Tax Assessment Act 1936 Section 159P

Reasons for decision

Section 159P of the Income Tax Assessment Act 1936 (ITAA 1936) allows a medical expenses tax offset if you pay medical expenses in an income year for yourself 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 threshold amount. The threshold for the 2011-12 income year is $2,060.

Subsection 159P(4) of the ITAA 1936 defines 'medical expenses' as payments that include payments to a legally qualified medical practitioner, nurse or chemist, or a public or private hospital, in respect of an illness or operation (paragraph (a) of the definition).

Neither 'illness' nor 'operation' is defined in the ITAA 1936, nor are they defined in any other legislation relating to income tax. 'Illness' was discussed by Dr Gerber of the Taxation Board of Review No.3 in Case Q21, 83 ATC 77. He said that the word 'includes any condition marked by a pronounced deviation from the normal healthy state 'and 'any disorder of body, function or systems'.

It is accepted that pregnancy is a process in which the normal healthy state is markedly altered for the duration of and for some time after the pregnancy and particularly during childbirth. It is a condition which carries significant risk of morbidity and mortality, for both mother and child. As such, it is considered pregnancy and childbirth would be caught by the ordinary meaning of the term illness.

In your case, you were required to purchase an electric breast pump for the purpose of providing breast milk whilst your baby was in intensive care. As the breast pump was purchased from the hospital and in relation to an illness, it qualifies as a medical expense for the purpose of a medical expense tax offset, under section 159P(4) of the ITAA 1936.