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Edited version of your written advice
Authorisation Number: 1013008022838
Date of advice: 5 May 2016
Ruling
Subject: Net medical expenses tax offset
Questions and answers
1. Are you entitled to the medical expenses offset for the care provided by the retired mental health nurse?
Yes.
2. Are you entitled to the medical expenses offset for the amount which represents salary from the care provided by the commercial nursing agency?
Yes.
3. Are you entitled to the medical expenses offset for the care provided by the student?
No.
This ruling applies for the following period:
Year ending 30 June 2015
The scheme commenced on:
1 July 2014
Relevant facts and circumstances
You have an illness.
You receive ongoing care in your home.
You are not blind, permanently confined to bed or invalid chair.
You received care from a retired mental health nurse who was registered as a nurse, nurses from a commercial nursing agency along with a student who was not a registered nurse but available to provide care to you.
Their duties consisted of:
• Showering
• Feeding and hydrating
• Supervising safety
• Takes you for walks
• Handles any business etc.
• Take to appointments
The care provided by the commercial agency is related to care provided by an approved provider within the meaning of the Aged Care Act 1997.
You are an approved aged care recipient under the Aged Care Act 1997.
You are a continuing care recipient under the Aged Care Act 1997.
Relevant legislative provisions
Income tax Assessment Act 1936 section 8-159P
Reasons for decision
A medical expenses tax offset is available under section 159P of the Income Tax Assessment Act 1936 (ITAA 1936), where you have paid medical expenses in an income year for yourself and/or a dependent who is an Australian resident.
The medical expenses tax offset is only available if the amount of medical expenses (reduced by any entitlement to reimbursement from a health fund or government authority.
Medical expenses are defined in subsection 159P(4) of the ITAA 1936 to include payments to a legally qualified medical practitioner, nurse or chemist, or a public or private hospital, in respect of an illness or operation (paragraph (a) of the definition).
While this subsection requires that the payments must be paid to specific people, such as a legally qualified medical practitioner or a nurse, subsection 159P(5) of the ITAA 1936 extends that definition to include payments made to the employers of the relevant person in respect of the services or treatment they have provided.
However, where the payment is made to another entity, the only amount which will qualify for the tax offset is the amount that represents the remuneration (for example wages) of a person for their services as an attendant or carer.
Where another entity receives the taxpayer's payment and then deducts an amount for their administration costs, those costs are not remuneration of a person for the services they provide as an attendant and will therefore not qualify as medical expenses.
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:
(a) relates to an aid for a person with a disability; or
(b) relates to services rendered by a person as an attendant of a person with a disability; or
(c) relates to care provided by an approved provider (within the meaning of the Aged Care Act 1997) of a person who:
(i) is approved as a care recipient under that Act; or
(ii) is a continuing care recipient within the meaning of that Act.
The care you receive from the retired mental health nurse and the commercial nursing agency will be allowable medical expenses under section 159P as this care is provided by qualified nursing staff.
The care provided by the student will not qualify as medical expenses.