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Ruling

Subject: Medical expenses

Question 1

Are the costs of a specific surgery, medical expenses for the purpose of claiming a medical expenses tax offset?

Answer

Yes.

Question 2

Are the costs of travel and hotel accommodation medical expenses for the purpose of claiming a medical expenses tax offset?

Answer

No.

This ruling applies for the following periods

Year ended 30 June 2012

The scheme commenced on

1 July 2011

Relevant facts

You have specific medical disorder.

You underwent surgery overseas.

Prior to the specific surgery, you struggled with depression and social anxiety which warranted medical and psychological intervention.

You incurred expenses to travel to the overseas country to have your specific surgery and also for hotel accommodation while recovering.

Relevant legislative provisions

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 under section 159P of the Income Tax Assessment Act 1936 (ITAA 1936), 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. The tax offset is 20% of the amount by which the net medical expenses exceeds the annual threshold.

Medical expenses are defined in subsection 159P(4) of the ITAA 1936 to 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).

The definition of "medical expenses" in sub-section 159P(4) of the ITAA 1936 includes payments to a legally qualified medical practitioner or a public or private hospital in respect of an illness or an operation.

Surgery

In this case, your specific disorder is considered to be an illness and the operation that you underwent is considered to be one of the final stages in the treatment of the illness. As such, the cost of the surgery is considered to be a medical expense for the purpose of claiming a medical expenses tax offset.

Travel and accommodation

Subsection 159P(4) of the ITAA 1936 specifically defines medical expenses which are eligible for the medical expenses rebate. The definition does not include the costs of travel or accommodation to obtain medical treatment. This was confirmed by the decision of the Administrative Appeals Tribunal in Case R12 84 ATC 165; (1984) 27 CTBR (NS) Case 63. In that case, travelling expenses whilst necessary in order to receive medical treatment were held not to be a payment for the medical treatment.

Accordingly, travel and accommodation expenses incurred in order to obtain medical treatment are not medical expenses as defined in subsection 159P(4) of the ITAA 1936 and cannot be included in a calculation for a medical expenses tax offset.