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This edited version has been archived due to the length of time since original publication.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.

You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4.

Edited version of your private ruling

Authorisation Number: 1012576149170

Ruling

Subject: medical expenses tax offset

Question

Will the costs you pay for the medical expenses of a surrogate qualify as a medical expense for the purposes of calculating a medical expense tax offset?

Answer

No.

This ruling applies for the following period

Year ended 30 June 2014

The scheme commenced on

1 July 2013

Relevant facts

You and your spouse are seeking the assistance of a surrogate to carry a baby for you due to fertility issues.

You will pay the medical costs for procedures performed on the surrogate.

The surrogate is not a dependant.

Relevant legislative provisions

Income Tax Assessment Act 1997 - Subsection 159P(1)

Income Tax Assessment Act 1997 - Subsection 159P(4)

Reasons for decision

A medical expenses tax offset is available under subsection 159P(1) of the Income Tax Assessment Act 1936 (ITAA 1936) where you pay medical expenses in an income year for yourself or a dependant who is an Australian resident, to the extent that you are not reimbursed, or are eligible to be reimbursed, from a government or public authority or a society, association or fund.

A 'dependant' is defined in subsection 159P(4) of the ITAA 1936 as:

    · The spouse of the taxpayer; or

    · A child of the taxpayer who is under 21 years of age; or

    · A person for whom the taxpayer is entitled to a dependant's rebate, or a child or student in respect of whom the taxpayer qualifies for a notional dependants rebate.

The definition of "medical expenses" in subsection 159P(4) of the ITAA 1936 includes payments to a legally qualified medical practitioner or a public or private hospital in respect of an illness or an operation.

Taxation Ruling IT 2359 states that infertility is accepted as an illness within the ordinary meaning of the term. The expenses you will pay relate to another person who acts as a surrogate for your child.

While it is accepted that infertility is an illness, the expenses for the surrogate will not be paid in respect of yourself or a dependant. Therefore they do not qualify as a medical expense and cannot be included as part of a calculation for a medical expense tax offset.


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