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Ruling
Subject: Medical expenses
Question
Are the costs or reconstructive surgery medical expenses for the purpose of claiming a medical expenses tax offset?
Answer
Yes.
This ruling applies for the following periods
Year ended 30 June 2012
The scheme commenced on
1 July 2011
Relevant facts
Your child was born with a medical condition.
They had reconstructive surgery a number of years ago. However, the surgery was not successful and they again underwent reconstructive surgery.
Medicare benefits were paid on some of the costs.
Relevant legislative provisions
Income Tax Assessment Act 1936 Subsection 159P(1)
Income Tax Assessment Act 1936 Subsection 159P(4)
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.
The terms "illness" and "operation" are not defined in the income tax law. The terms are not technical and are to be given the meanings which are ordinarily given to them. The meaning of the term "illness" was discussed by Taxation Board of Review No. 3 in Case Q21, 83 ATC 77: Case 85 26 CTBR(NS) 570. Dr Gerber expressed his understanding of the concept of illness in these words:
'Illness' is not defined in the Act. However, I do not accept that it is a term of art. Adopting a purposive construction, I find the term includes any condition marked by a pronounced deviation from the normal healthy state. If this is the correct view, 'illness' must include any disorder of body, function or systems.
In this case, it is considered that being born with a condition is a pronounced deviation from the normal healthy state. Therefore, the cost of the surgery to correct the condition is considered to be a medical expense for the purpose of claiming a medical expenses tax offset.