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Edited version of your private ruling
Authorisation Number: 1012615123016
Ruling
Subject: Medical expense tax offset
Question
Are caregiver payments considered to be eligible medical expenses for the purposes of the medical expense tax offset?
Answer
Yes.
This ruling applies for the following periods:
Year ended 30 June 20XX
Year ended 30 June 20XX
Year ending 30 June 20XX
Year ending 30 June 20XX
Year ending 30 June 20XX
Year ending 30 June 20XX
Year ending 30 June 20XX
Year ending 30 June 20XX
The scheme commences on:
1 July 20XX
Relevant facts and circumstances
You are an Australian resident for tax purposes.
You sustained an injury from a accident and were diagnosed as suffering from complete paraplegia which has left you permanently confined to a wheelchair.
You have been assessed by a legally qualified medical practitioner as requiring an attendant carer.
You made an application to a state government department for assistance. Due to the local branch operating at capacity, they were unable to provide you with an attendant carer.
Your parents have taken on the role as your full-time carers.
You have provided two signed live-in caregiver payment agreement with your parents, which clearly states the weekly payment amount agreed upon, the period the agreement is for and a description of the carers responsibilities.
The payments you make commenced in early 20XX and are ongoing.
Relevant legislative provisions
Income Tax Assessment Act 1936 Section 159P
Income Tax Assessment Act 1936 Subsection 159P(1)
Income Tax Assessment Act 1936 paragraph 159(1B)(b)
Income Tax Assessment Act 1936 Subsection 159P(4)
Income Tax Assessment Act 1936 paragraph 159P(4)(h)
Reasons for decision
A medical expenses tax offset is available under subsection 159P(1) of the Income Tax Assessment Act 1936 where the taxpayer pays eligible medical expenses in an income year for themselves or a dependant who is an Australian resident.
The medical expenses tax offset is only available if the amount of medical expenses, after being reduced by any entitlement to reimbursement from a health fund or government authority such as Medicare, exceeds the threshold amount.
The amount of net medical expenses tax offset you can claim now depends on your level of income as the rebate is now income tested. This not only affects the threshold amount but also the percentage of the rebate you can claim. It should be noted that the threshold amount is subject to indexation and will change in future income years.
Under the legislation, payments that are made to a person for services rendered by them to a person with a disability are considered to be an eligible medical expense.
In your case you sustained injuries from an accident which has left you permanently confined to a wheelchair. You were assessed by a legally qualified medical practitioner as requiring assistance. A state government department informed you that the local branch was operating at full capacity and were unable to provide you with any assistance, so your parents have taken on the role as your full-time carers.
The weekly caregiver payments you make are considered to be an eligible medical expense and you are entitled to include these amounts in your calculation of the medical expense tax offset.