Edited version of your written advice

Authorisation Number: 1012855327776

Date of advice: 6 August 2015

Ruling

Subject: Medical expenses

Question

Are you able to claim the net medical expenses tax offset (NMETO) in 2015 for the costs incurred in relation to your in-vitro fertilisation (IVF) treatment?

Answer

No.

This ruling applies for the following periods:

Year ended 30 June 2015

The scheme commenced on:

1 July 2013

Relevant facts and circumstances

You have a medical condition which has affected your ability to have children.

You are now undergoing IVF treatment and genetic testing.

This treatment is being administered by legally qualified medical practitioners.

You have out-of pocket expenses in relation to your IVF procedures.

You have provided copies of invoices paid in the relevant financial year which relates to the IVF treatment.

You did not claim the NMETO on your income tax return in the years ended 30 June 2013 or 2014.

Relevant legislative provisions

Income Tax Assessment Act 1936 Section 159P

Income Tax Assessment Act 1936 Subsection 159(1)

Income Tax Assessment Act 1936 Subsection 159P(1C)

Income Tax Assessment Act 1936 Paragraph 159P(1C)(a)

Income Tax Assessment Act 1936 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 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.

This tax offset is income tested. The percentage of net medical expenses you can claim and the threshold amount is determined by your adjusted taxable income (ATI) and family status. It should also be noted that the threshold amount is subject to indexation and will change in future income years.

The net medical expenses tax offset (NMETO) is being phased out between the 2013-14 and 2018-19 financial years and eligibility for this offset has changed.

Transitional arrangements will allow taxpayers to claim the offset from the 2013-14 income year until the end of the 2018-19 income year, but only for those medical expenses relating to disability aids, attendant care or aged care.

In addition, for the 2013-14 and 2014-15 income years, taxpayers will be eligible to claim the full range of medical expenses (as defined currently) but only if they have received an amount of the net medical expenses tax offset in the previous income year (or in both 2012-13 and 2013-14 in respect to claims in the 2014-15 income year).

IVF procedures

Subsection 159P(4) of the ITAA 1936 defines medical expenses which are eligible for the net medical expenses tax offset. Paragraph (a) of the definition of medical expenses in subsection 159P(4) of the ITAA 1936 includes payments made to a legally qualified medical practitioner, nurse or chemist, or a public or private hospital, in respect of an illness or operation.

Taxation Ruling IT 2359 Income tax: medical expenses - in vitro fertilization states that infertility can be caused by a number of factors. Whatever the cause it is a disorder of body, function or systems and is an illness within the ordinary meaning of the term and payments to a legally qualified medical practitioner or hospital for treatment under an IVF program qualify as medical expenses.

Your IVF costs have all been paid to a legally qualified medical practitioner and hospital and are considered to form part of your treatment to overcome infertility.

These types of costs are considered eligible medical expenses for the purposes of the medical expense tax offset in the 2012-13 financial year.

However, due to the transitional arrangements you need to have received an amount of the NMETO in your income tax assessment for the year ended 30 June 2013 and for the year ended 30 June 2014 to be eligible to claim your out-of-pocket IVF expenses in the 2015-15 financial year.

In your case, as you did not claim the NMETO in these years, it follows that you are not eligible to claim the medical expenses tax offset for your IVF costs in the year ended 30 June 2015.