Edited version of your private ruling

Authorisation Number: 1012448903993

Ruling

Subject: Medical expenses tax offset

Question and answer

Are you entitled to include the cost of your treatment program as a medical expense for the purpose of calculating a net medical expenses tax offset?

No

This ruling applies for the following period

Year ending 30 June 2013

The scheme commenced on

1 July 2012

Relevant facts

You have carried out some research and believe that having treatment will reduce the chances of certain medical conditions occurring.

You are undergoing a treatment program.

The treatment program involves you taking home medication and you have a check up at the clinic every two to three months.

You did not need a referral from your doctor to go to the clinic.

Medicare or a private health fund has not reimbursed you.

Relevant legislative provisions

Income Tax Assessment Act 1936 Section 159P

Income Tax Assessment Act 1936 Subsection 159P (4)

Reasons for decision

A medical expense tax offset is available to a taxpayer under section 159P of the Income Tax Assessment Act 1936 (ITAA 1936), where the taxpayer incurs medical expenses for themselves or a dependant who is an Australian resident.

The medical expenses tax offset is only available if the net amount of medical expenses (i.e. the total amount the taxpayer is out of pocket after any entitlement to reimbursement from a health fund or government authority is taken into account) exceeds $2,000.

Subsection 159P(4) of the ITAA 1936 defines what are 'medical expenses'. Paragraph 159P(4) (a) of the ITAA 1936 of the definition includes payments made to a legally qualified medical practitioner in respect of an illness or operation.

The term 'illness' is not defined in the ITAA 1936 and therefore, it is necessary to look at the ordinary meaning of the term. An illness includes a sickness, disease, or disorder of the body or the mind and involves a deviation from the normal healthy state.

Your condition is not considered to be an illness or disease.

Medical expenses - therapeutic treatment

Paragraph 159P(4)(d) of the ITAA 1936 includes in the definition of medical expense, a payment 'for therapeutic treatment administered by direction of a legally qualified medical practitioner.'

 In order to qualify for the tax offset such payments must meet the following conditions:

· they are for therapeutic treatment; and

· the therapeutic treatment is administered by the direction of a legally qualified medical practitioner.

 As the legislation does not define the word 'therapeutic', the dictionary definition of 'therapeutic' should be referred to. According to the Oxford Dictionary 'therapeutic' means:

The branch of medicine that deals with the treatment and cure of disease and ill health; the art of healing. A curative agent; a healing influence.

According to the Macquarie Dictionary 'therapeutic' means:

· relating to the curing of disease; treat medically.

To qualify for a tax offset, it is necessary to establish that the cost of the hair loss treatment is a 'medical expense' as defined in paragraph 159P(4)(d) of the ITAA 1936.

The Board of Review has taken the view that 'the general concept of therapeutic treatment seems to be the positive one of healing or curing rather than the negative one of the prevention of the need for therapy' (Case S2, 85 ATC 102; (1985) 28 CTBR (NS) Case 8).

 In Case R95 84 ATC 633; (1984) 27 CTBR (NS) Case 148, the Board of Review found that '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 disease or ailment.

 Physiotherapy, massage, chiropractic treatment and osteopathy are common examples of therapeutic treatment.

In your case, you are undergoing treatment program. The treatment comprises the use of medication. The treatment is not in respect of curing or managing a disease or illness. It was your personal choice to undergo the treatment and was not a requirement to treat your condition.

Even if your condition was considered an illness or disease and the treatment program was considered therapeutic, the treatment would be excluded as it would meet the definition of being a cosmetic procedure. You have not received any Medicare benefit in respect of the program, as the cosmetic procedure does not meet the criteria for a benefit to be paid.

Therefore, the expense you incurred is not an eligible medical expense and cannot be included in calculating a medical expenses tax offset.