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Ruling

Subject: Medical expenses tax offset

Question:

Are you entitled to a medical expenses tax offset for expenses you have paid on behalf of an egg donor in relation to your IVF treatment?

Answer:

Yes.

This ruling applies for the following periods:

Year ended 30 June 2012

The scheme commences on:

1 July 2011

Relevant facts and circumstances

You are an Australian resident for income tax purposes.

You participated in an In Vitro Fertilization (IVF) treatment program.

The treatment was provided by legally qualified medical practitioners.

You paid for the medical expenses incurred by the egg donor in relation to the egg harvesting procedure.

All the invoices relating to the medical expenses were in the name of the donor apart from one.

The egg donor was entitled to claim the expenses invoiced to her through Medicare.

Relevant legislative provisions

Income Tax Assessment Act 1936 - section 159P

Income Tax Assessment Act 1936 - subsection 159P (4)(a)

Reasons for decision

A medical expenses tax offset is available to Australian resident taxpayers under section 159P of the Income Tax Assessment Act 1936 (ITAA 1936), where the taxpayer incurs medical expenses for themselves, their spouse, their children or other dependants.

For the 2011-12 income year, taxpayers can claim 20% of their net medical expenses over $2,060. There is no upper limit on the amount that can be claimed.

Net medical expenses are total medical expenses less refunds from Medicare and private health insurers which the taxpayer, or someone else, received or is entitled to receive. Taxpayers can claim medical expenses paid to a legally qualified medical practitioner or hospital in relation to an illness or operation.

Taxation Ruling IT 2359 Income tax: medical expenses - in vitro fertilization states that infertility is an illness within the ordinary meaning of the term and payments to a legally qualified medical practitioner or hospital for treatment under an in vitro fertilization (IVF) program qualify as medical expenses.

In your case, you participated in an IVF program and paid the expenses of another person who underwent donor egg harvesting procedures at a hospital. The donor was entitled to claim the expenses invoiced to her through Medicare. The cost of obtaining the donor eggs was part of the cost of the IVF treatment and all of the payments were made to a legally qualified medical practitioner or a hospital.

Although in your case the medical expenses were in respect of an operation performed on a person other than yourself, spouse or dependant, this does not preclude the expenses from qualifying for the medical expenses tax offset. The definition of 'medical expenses' in subsection 159P (4) includes at (a) payments 'in respect of an illness or an operation'. As IT 2359 accepts infertility as an illness, the operation and associated procedures were made in respect of an illness relating to you and the expenses therefore qualify for the medical expenses tax offset.

The expenses qualify as medical expenses for the purposes of calculating the medical expense tax offset under section 159P of the ITAA 1936. You can claim 20% of the total medical expenses you paid yourself, after subtracting the amount of any refunds from Medicare and private health insurers which you, or the donor, received or were entitled to receive.