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Edited version of your private ruling
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Ruling
Subject: Medical expenses tax offset
Question
Does the cost of your dependant's prescribed medicines and supplements qualify as an eligible medical expense, for medical expenses tax offset purposes, if you did not purchase them from a chemist?
Answer
Yes.
This ruling applies for the following period:
Year ended 30 June 2012
The scheme commences on:
01 July 2011
Relevant facts and circumstances
This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling.
Your dependant is required to take complementary medicines and nutritional supplements.
These are prescribed and overseen by your dependant's general practitioner.
These medications have been purchased from pharmacies, health food stores and directly from a manufacturer.
Relevant legislative provisions
Income Tax Assessment Act 1936 section 159P
Income Tax Assessment Act 1936 subsection 159P(4)
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 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 $2,060. The tax offset is 20% of the amount by which the net medical expenses exceeds $2,060.
Subsection 159(4) of the ITAA 1936 states that medical expenses include payments 'to a legally qualified medical practitioner, nurse or chemist, or a public or private hospital in respect of an illness or operation'.
However if medication is purchased from other outlets (for example, a health food store or supermarket), then the expense will only qualify as a medical expense if the treatment is therapeutic and administered by the direction of a legally qualified medical practitioner. Thus there are two tests which must be satisfied.
For treatment to be regarded as being administered by direction of a legally qualified medical practitioner, the treatment needs to be advised, prescribed or ordered by a legally qualified medical practitioner. It also requires monitoring to some extent by the medical practitioner.
The second requirement is that the treatment is therapeutic. Therapeutic treatment is concerned with healing or curing, rather than preventing the need for therapy. Therapeutic treatment involves the exercise of professional skill in the medical field in a way which normally involves the person administering the treatment using drugs or physical or mental processes of one kind or another for the purpose of curing or managing the disease.
In your case, your dependant is required to take complementary medicines and nutritional supplements prescribed and overseen by their general practitioner.
The fact that some of these medications have been purchased from health food stores and directly from a manufacturer does not affect the chemical composition or psychological effects of a particular medication. The source of therapeutic treatment is not usually relevant to the determination of whether the purpose of a treatment is to heal, cure or manage an illness or disease.
Accordingly, it is accepted that your dependant's medication is a treatment which is therapeutic and administered by direction of a medical practitioner. Therefore you are entitled to include the cost of the medications as an eligible medical expense for medical expenses tax offset purposes.