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Edited version of your private ruling
Authorisation Number: 1012530984379
Ruling
Subject: Laser treatment
Question
Can the cost of your removal of tattoos be included as a medical expense for the purpose of calculating a medical expenses tax offset?
Answer
No.
This ruling applies for the following period
Year ended 30 June 2013
The scheme commenced on
1 June 2012
Relevant facts
Due to the emotional and psychological impact, you are having tattoos professionally removed by laser treatment from your arms and shoulders, at a laser clinic.
You have had several treatments and will need several more in the remainder of the year. You also require medication after each treatment for skin recovery and antiseptic needs for pain relief.
Relevant legislative provisions
Income Tax Assessment Act 1936 Subsection 159P (1)
Income Tax Assessment Act 1936 Subsection 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 a government or public authority or a society, association or fund.
The medical expenses tax offset is 20% of the amount by which the net medical expenses exceed the threshold. 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.
Subsection 159P(4) of the ITAA 1936 was amended to define 'ineligible medical expenses' to include payments to a legally qualified medical practitioner, nurse or chemist, or a public or private hospital, in respect of a cosmetic operation that is not a professional service for which a Medicare benefit is payable under Part II of the Health Insurance Act 1973. The amendments were made to the legislation for the 2005-06 and later income years.
To determine if an expense is an ineligible medical expense for medical expenses tax offset purposes two factors have to be considered:
· Is the procedure cosmetic in nature according to the ordinary definition of cosmetic, and
· If the procedure is cosmetic, is a Medicare benefit payable?
In determining whether an operation is 'cosmetic' the Commissioner must consider the ordinary meaning of the word (paragraph 4.18 of the Explanatory Memorandum to the Tax Laws Amendment (2005 Measures No 6) Bill 2005 (the EM)).
Paragraph 4.19 of the EM refers to the following definition of cosmetic in The Macquarie Dictionary:
- serving to beautify; imparting or improving beauty, especially of the complexion
- designed to effect superficial alteration while keeping the basis unchanged.
In you situation, a Medicare benefit is not payable and in relation to the second part of the above definition, the operation is merely superficial and does not change the basis. That is, only the appearance and not the function of the skin has been changed.
Therefore, for the purposes of the medical expenses tax offset, your laser tattoo removal is an ineligible medical expense and consequently the cost can not be included in medical expenses tax offset calculations.