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This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law.

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Edited version of your private ruling

Authorisation Number: 1012478447591

Ruling

Subject: Medical expenses tax offset

Question and answer

Are you entitled to include accommodation expenses you incurred in relation to admission to various rehabilitation clinics when calculating your claim for the medical expenses tax offset?

Yes

This ruling applies for the following years

Year ended 30 June 2008

Year ended 30 June 2009

Year ended 30 June 2010

Year ended 30 June 2011

Year ended 30 June 2012

The scheme commenced on

1 July 2007

Relevant facts and circumstances

You are an Australian resident for tax purposes.

You suffer from a medical condition.

You have incurred substantial costs in relation to your diagnosed condition, particularly admission costs to various clinics.

The clinics you attend for treatment are attached or affiliated to hospitals and some are independent clinics.

Living at the clinics and being an inpatient is a requirement for you to receive appropriate treatment for your diagnosed condition.

The treatment you receive is reliant on the inpatient nature of the facility. The entire basis of the treatment and living at the facility for the period you receive treatment is mandatory in your circumstances.

The treatments you receive require overnight stays and therefore it is not optional, you must stay at the facility to receive the appropriate treatment.

You have been under the care and treatment of referring medical professionals.

For each of the programs you attend you have referring doctors and the treatment you receive is not available without a referral.

Depending on the clinic you attend and the location you have several referring and treating doctors.

When you are admitted to the rehabilitation clinics you have accommodation costs.

Medicare or a private health fund has not reimbursed you for the accommodation costs.

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.

Medical expenses relating to an illness or operation paid to legally qualified doctors, nurses or chemists and public or private hospitals can qualify for the tax offset.

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 $1,500 for the years ended 30 June 2008 to 2010 and $2,000 for the years ended 30 June 2011 and 2012. The tax offset is 20% of the amount by which the net medical expenses exceeds the relevant amount mentioned for each income year.

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.

Therapeutic treatment as a concept is concerned with healing or curing, rather than preventing the need for therapy. Therapeutic treatment involves the exercise of professional skill in the medical field in a way that 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 the disease (Case R95 84 ATC 633; (1984) 27 CTBR (NS)Case 148).

The therapeutic treatment must be administered by direction of a legally qualified medical practitioner. A mere suggestion or recommendation by a doctor to a patient that the patient undergo therapeutic treatment is not enough for the associated expenses to qualify as medical expenses. The patient must be referred by a doctor to a particular person for the therapeutic treatment.

In your situation, legally qualified medical practitioners referred you to rehabilitation programs as an inpatient at various specialised rehabilitation clinics to treat your condition.

The treatment you receive at the clinics is under the direction and supervision of medical practitioners.

The rehabilitation treatments you receive are therapeutic treatments for the purposes of subsection 159P(4) of the ITAA 1936.

Accordingly, the expenses you incurred in relation to the admission to the rehabilitation clinics are eligible medical expenses and can be included in calculating a medical expenses tax offset.