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Edited version of your written advice
Authorisation Number: 1012900425910
Date of advice: 27 October 2015
Ruling
Subject: Medical expenses
Question 1
Are expenses in relation to medical procedures for you paid to a legally qualified medical practitioner, nurse, chemist or hospital eligible medical expenses for the purposes of the medical expenses tax offset?
Answer
Yes.
Question 2
Can expenses in relation to the donor be included in the calculation of the medical expenses tax offset?
Answer
No.
Question 3
Are your flight and accommodation costs eligible medical expenses for the purposes of the medical expenses tax offset?
Answer
No.
This ruling applies for the following period
Year ended 30 June 20ZZ
The scheme commenced on
1 July 20XX
Relevant facts
You are an Australian resident.
You travelled overseas for treatment.
You incurred expenses for yourself and for a donor.
The donor was not your dependant.
You received a medical expenses tax offset in the 20WW-XX and 20XX-YY financial years.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 159P
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 certain 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.
However, it is not necessary that the payments be made to a resident or that they be paid in Australia. Therefore, medical expenses incurred overseas may qualify as a medical expense.
Under recent changes to the legislation, the medical expenses tax offset is being phased out.
To be eligible to claim this offset in 20XX-YY, you must have either:
• received this offset in your 20WW-XX and 20XX-YY income tax assessments, or
• paid for medical expenses relating to disability aids, attendant care or aged care.
In your case you received the medical expenses tax offset in your 20WW-XX and 20XX-YY tax assessments.
The amount of net medical expenses tax offset you can claim depends on your level of income. The percentage of net medical expenses you can claim is determined by your adjusted taxable income and family status.
In order for a medical expense to be treated as an eligible medical expense, the expense must fall within the definition of 'medical expenses' as contained in subsection 159P(4) of the ITAA 1936.
Therefore, we have to determine whether the payments you have made qualify as medical expenses for the purposes of the medical expense tax offset.
Procedures for yourself
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.
Your condition is an illness within the ordinary meaning of the term and expenses associated with overcoming that illness are medical expenses. Payments to a legally qualified medical practitioner or a hospital for treatment under the program qualify as medical expenses under subsection 159P(4) of the ITAA 1936.
In your case, you made payments for treatment for yourself. The procedures undertaken by a legally qualified medical practitioner and the medication purchased from a chemist qualify as eligible medical expenses within the meaning of section 159P(4) of the ITAA 1936 and you are entitled to include the expenses in relation to the treatment received by you in the calculation of the medical expenses tax offset.
Procedures for donor
Subsection 159P(1) of the ITAA 1936 provides that the medical expenses must be paid in respect of the taxpayer, or a dependant of the taxpayer, to qualify for the medical expenses tax offset.
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 dependants rebate, or a child or student in respect of whom the taxpayer qualifies for a notional dependants rebate.
As the donor was not a dependant, the costs involved in the procedures for the donor cannot be included in the calculation of the medical expenses tax offset.
Travel costs
Travel, accommodation and flight expenses associated with medical treatment are not eligible medical expenses as the payments are not made to a legally qualified medical practitioner, nurse or chemist, or a public or private hospital.
Therefore, you cannot include any of your travel and incidental costs in your calculation of the medical expenses tax offset.