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Ruling

Subject: Tax offsets

Question

Are the expenses you paid for on behalf or an egg donor as part of in-vitro fertilisation (IVF) treatment a medical expense for the purposes of the medical expenses tax offset?

Answer

Yes.

This ruling applies for the following period

Year ended 30 June 2012

The scheme commences on

1 July 2011

Relevant facts and circumstances

You are a resident for taxation purposes.

You commenced a round of IVF treatment.

This treatment involved the use of donor eggs.

You are responsible for the expenses of the donor in respect of the IVF treatment.

The medication that was required by the donor was purchased through the IVF clinic.

The treatment was delivered by a legally qualified medical practitioner.

All payments were made to a legally qualified medical practitioner or hospital.

Relevant legislative provisions

Income Tax Assessment Act 1936 Section 159P

Income Tax Assessment Act 1936 Section 159P(1)

Income Tax Assessment Act 1936 Section 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 Medicare and private health insurers.

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.

The term medical expenses are defined in paragraph (a) of 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.

Taxation Ruling IT 2359 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 IVF program qualify as medical expenses.

In your case, you incurred expenses which were paid in relation to an egg donor as part of your IVF treatment. The procedure was undertaken by a legally qualified medical practitioner. Medication required by the donor was purchased from the IVF clinic.

Although the medical expenses were made on behalf of a person other than yourself or your dependant, this does not preclude the expenses from qualifying for the medical expenses tax offset. The cost of obtaining the donor eggs as part of IVF is considered to be a cost of the treatment to overcome infertility. 

Therefore, the payments you have made in respect of the egg donor qualify as eligible medical expenses within the meaning of section 159P of the ITAA 1936 and you are entitled to include the out of pocket costs in your calculation of the medical expenses tax offset.