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Ruling
Subject: Medical expenses tax offset - therapeutic treatment
Question:
Are your entitled to include in your calculation of the medical expenses tax offset, out of pocket expenses you have paid for various therapists in the treatment of your child's condition?
Answer:
Yes.
This ruling applies for the following periods
Year ended 30 June 2012
Year ending 30 June 2013
Year ending 30 June 2014
Year ending 30 June 2015
Year ending 30 June 2016
Year ending 30 June 2017
The scheme commences on
1 July 2011
Relevant facts and circumstances
You are a resident of Australia for tax purposes.
You have a dependent child who has been diagnosed with an illness.
Your child is under the care of a legally qualified medical practitioner.
The legally qualified medical practitioner has referred your child to particular therapists for specific treatment.
The various therapists provide written reports on your child's progress to the legally qualified medical practitioner.
Your child has regular appointments with the legally qualified medical practitioner to monitor their condition.
Relevant legislative provisions
Income Tax Assessment Act 1936 Section 159P
Income Tax Assessment Act 1936 Subsection 159P(1)
Income Tax Assessment Act 1936 Subsection 159P(4)
Reasons for decision
A medical expenses tax offset is available to a taxpayer under subsection 159P(1) of the Income Tax Assessment Act 1936 (ITAA 1936) where the taxpayer pays medical expenses in an income year for themselves 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 the threshold. For the 2011-12 financial year the threshold is $2,060. Please note that the threshold amount is subject to indexation and from the 2012-13 financial year is also subject to income testing and this will change the threshold in future years.
Therapeutic treatment
Paragraph (d) of the definition of medical expenses in subsection 159P(4) of the ITAA 1936 includes payments made for therapeutic treatment administered by direction of a legally qualified medical practitioner.
It was held in Case A53 69 ATC 313; 15 CTBR (NS) Case 30 that the mere suggestion or recommendation by a medical practitioner that the patient undergoes therapeutic treatment is not sufficient for the payment to qualify as medical expenses. The patient would have to be referred by a medical practitioner to a particular person for specific treatment.
The general concept of 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 or ailment
Although the treatment must be administered by direction of a legally qualified medical practitioner, the treatment need not be administered by such a practitioner.
In your case, your child has been referred, by a legally qualified medical practitioner, to particular therapists so that your child can receive specific therapeutic treatment. The purpose of this treatment is to improve various aspects of your child's condition.
Therefore, the out of pocket expenses you have paid for the various treatments qualify as eligible medical expenses for the purposes of the medical expenses tax offset and you are entitled to include the unreimbursed costs in your calculation of the medical expense tax offset.