Edited version of your written advice

Authorisation Number: 1012893636278

Date of advice: 14 October 2015

Ruling

Subject: Net Medical Expenses Tax Offset

Question 1

Do your out-of-pocket expenses for an attendant carer qualify for inclusion in the calculation of the medical expenses tax offset?

Answer

Yes.

Question 2

Do your out-of-pocket expenses solely for a cleaner qualify for inclusion in the calculation of the medical expenses tax offset?

Answer

No

Question 3

Do your out-of-pocket expenses to attend the gym qualify for inclusion in the calculation of the medical expenses tax offset?

Answer

No

This ruling applies for the following periods:

Year ended 30 June 2016

Year ended 30 June 2017

Year ended 30 June 2018

Year ended 30 June 2019

The scheme commences on:

1 July 2015

Relevant facts and circumstances

You are an Australian resident for tax purposes.

You have a disabling condition, and are generally wheelchair bound. You have received an Aged Care Assessment Team(ACAT) assessment. The ACAT approved carer provider does not have regular times for attending, and you have a carer from another provider attend your home. The carer attends to your showering and other needs through the day

The care provider arranges for a cleaner to clean your house, and bills you separately for housecleaning.

Your spouse transports you to a gym for rehabilitation. You have an out of pocket expense for the rehabilitation sessions.

You have out-of-pocket expenses in relation to the personal carer visits.

You did receive an amount of the medical expenses tax offset in your 2014-15 income tax assessment.

Relevant legislative provisions

Income Tax Assessment Act 1936 Section 159P

Income Tax Assessment Act 1936 Subsection 159P(1)

Income Tax Assessment Act 1936 Paragraph 159P(1B)(b)

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 income years and eligibility for this offset has changed restricting who can claim and what medical expenses can be claimed.

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 your case, you have received an amount of the NMETO in your 2014-15 income tax assessment; therefore you are entitled to make an eligible NMETO claim for the medical expenses for disability aids, attendant care or aged care.

In order to claim the offset the expenditure must fall within the definition of 'medical expenses' as contained in subsection 159P(4) of the ITAA 1936.

Based on your circumstances paragraph 159P(1B)(b) of the ITAA 1936 would be the only provision where your expenses can be considered. This paragraph states:-

For the 2013-14 to 2018-19 years of income, an amount that would otherwise be paid as medical expenses is treated as not being paid as medical expenses unless the payment  relates to services rendered by a person as an attendant of a person with a disability.

A person who is considered to be disabled is entitled to claim the cost of an attendant carer.

Attendant carer services relate to services and care provided to a person with a disability to assist with everyday living, such as the provision of personal assistance, home nursing, home maintenance, and domestic services.

For example, a person has an acquired brain injury and pays for an attendant to come to their home to assist with grooming, clothing and feeding activities during the day. The expenses for the services provided by the attendant would be considered related to attendant care under this measure.

Therefore, you are entitled to include your out-of-pocket costs for the attendant carer in your calculation of the net medical expenses tax offset.

As separate services such as cleaning of the house and gym visits are not considered to be disability aids, attendant care or aged care, out-of-pocket expenses for these services do not qualify for inclusion in the calculation of the medical expenses tax offset.