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Ruling
Subject: Medical expense tax offset
Question
Are you entitled to include dental expenses incurred overseas in the calculation of your medical expenses tax offset?
Answer
Yes
This ruling applies for the following periods:
Year ended 30 June 2012
Year ending 30 June 2013
The scheme commences on:
01 July 2011
Relevant facts and circumstances
You are an Australian resident.
You went overseas to receive some dental treatment from a legally qualified dentist.
The majority of the dental treatment was not cosmetic in nature.
Relevant legislative provisions
Income Tax Assessment Act 1936 section 159P
Income Tax Assessment Act 1936 subsection 159P(4)
Income Tax Assessment Act 1936 paragraph 159P(4)(b)
Reasons for decision
A medical expenses tax offset is available to a taxpayer under section 159P of the Income Tax Assessment Act 1936 (ITAA 1936), where the taxpayer, who is an Australian resident, incurred medical expenses for themself or a dependant who is also 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 (the rebatable amount) exceeds the relevant threshold amount.
The term 'medical expenses' is defined in subsection 159P(4) of the ITAA 1936. Paragraph (b) of the definition includes payments made to a legally qualified dentist for dental services or treatment or the supply alteration or repair of artificial teeth. However, if the dental service or treatment is solely cosmetic the expense becomes an ineligible medical expense.
While it is necessary that a taxpayer must be a resident of Australia to qualify for the tax offset, it is not necessary that the payments be made to a resident of Australia or that they are paid in Australia.
As such, medical expenses paid during an overseas trip may qualify for the tax offset where the treatment has been carried out by a legally qualified medical practitioner or legally qualified dentist.
In your case, you travelled overseas to receive some dental treatment. Whilst a small element of the dental treatment was cosmetic, it was not solely cosmetic in nature.
Therefore, your dental expenses incurred overseas are eligible medical expenses for the purposes of the medical expenses tax offset.