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Edited version of your written advice
Authorisation Number: 1051334392989
Date of advice: 2 February 2018
Ruling
Subject: Medical expense tax offset
Question and answer
Will the portion of payments you make to the program that relate to the provision of a designated carer qualify as eligible medical expenses for the purposes of the medical expenses tax offset?
Yes.
This ruling applies for the following periods
Year ending 30 June 2017
The scheme commences on
1 July 2016
Relevant facts and circumstances
You are a resident of Australia for tax purposes.
You have a dependent child who has been diagnosed with a disability.
Your child attends a program for a number of hours per week.
The program consists of medical professionals and therapists.
You have provided an example of a typical day in the program.
Your child has one carer designated to them on a daily basis.
Your fees are paid to the program and not a specific staff member.
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.
Attendant care
For the 2016-17 year of income, one of the eligible expenses includes payments made to a company for the provision of a carer for a disabled person, to the extent the payments represent remuneration of a person providing services as an attendant or carer.
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 (paragraph 159(1B)(b) of the ITAA 1936).Attendant care services provide assistance with everyday tasks and include, for example, personal assistance, home nursing, home maintenance and domestic services.
Your child has a disability which requires behavioural intervention and assistance with performing day to day tasks. A carer is designated to your child daily while attending the program.
It is considered that the portion of the fees paid under the program that relate to the provision of a carer would fall under ‘payments that relate to services rendered by a person as an attendant of a person with a disability’, and are an eligible medical expense.
Therefore, you are entitled to include the portion of fees relating to the provision of a carer when calculating your net medical expenses for the purposes of the Net Medical Expense Tax Offset.