Edited version of your written advice

Authorisation Number: 1013110983804

Date of advice: 19 December 2016

Ruling

Subject: Medical expenses tax offset

Subject: Tax offset - medical expenses

Question

Do the payments you make qualify as eligible medical expenses for the purposes of the medical expenses tax offset?

Answer

No

This ruling applies for the following periods

Year ending 30 June 2016

The scheme commences on

1 July 2015

Relevant facts and circumstances

You and your dependants are Australian residents for tax purposes.

You have a dependent that has been diagnosed with a medical condition.

Your dependent has not received an Aged Care Assessment (ACAT)

Your dependent attends an adult training support service.

The service is not an approved provider (within the meaning of the Aged Care Act 1997)

Your dependent also attends the facility a few days and nights per month to provide respite for other family members.

Your dependent attends a specific clinic.

You have out-of-pocket expenses in relation to the fees you pay.

Assumption(s)

None

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)(a)

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

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

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.

Based on your dependents circumstances paragraph 159P (1B) (c) 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 (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.

Your dependent receives ongoing education, literacy, numeracy, self-help and independent living skills and communication. The programs provided by the facility are not care provided by an approved provider under the Aged Care Act 1997.

The payments you make are primarily for education and life skills training as opposed to care within the meaning of the Aged Care Act 1997, and as such are not an eligible medical expense.

Therefore, you are not entitled to include your out-of-pocket expenses in relation to payments made to the facility in the calculation of the NMETO.

Treatment received at the specific clinic:

It is not considered that treatment received at the clinic is eligible to be claimed under any of the three following categories

● an aid for a person with a disability [Schedule 3, item 1, paragraph 159P(1B)(a)];

● services rendered by a person as an attendant of a person with a disability [Schedule 3, item 1, paragraph 159P(1B)(b)]; or

● care provided by an approved provider (within the meaning of the Aged Care Act 1997) of a person who is a care recipient or continuing care recipient (within the meaning of that Act) [Schedule 3, item 1, paragraph 159P(1B)(c)],

and so you are not entitled to include your out-of-pocket expenses in relation to payments made to the specific clinic in the calculation of the NMETO.