Edited version of your written advice

Authorisation Number: 1051345019297

Date of advice: 5 March 2018

Ruling

Subject: Net medical expenses tax offset

Question

Are you entitled to the net medical expenses tax offset (NMETO) for the purchase of a Cooking Aid as a disability aid?

Answer

No

This ruling applies for the following period:

Year ending 30 June 20XX

The scheme commences on:

1 July 20XX

Relevant facts and circumstances

You are an Australian resident for tax purposes.

You have a dependent child who has many medical conditions.

Your child is required to be fed through a Feeding Tube.

Your Doctor has recommended that you purchase a Cooking Aid for cooking and blending food to feed to your child through the PEG tube.

Relevant legislative provisions

Income Tax Assessment Act 1936 Subsection 159P(1)

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

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 NMETO is being phased out between the 2013-14 and 2018-19 financial years and eligibility for this offset has changed.

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.

Disability aids

Based on your circumstances paragraph 159P(1B)(a) 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 an aid for a person with a disability.

Disability aids are items of property manufactured as, distributed as, or generally recognised to be, an aid to the function or capacity of a person with a disability but, generally will not include ordinary household or commercial appliances.

Examples include wheelchairs, walking frames, hearing aids, car controls for the disabled and similar appliances.

While the Cooking Aid may assist with your child’s medical conditions, it has a general domestic or household purpose and the purchase of the Cooking Aid is not considered to be a payment for a disability aid. Therefore, the expenses incurred to purchase a Cooking Aid are not considered to be medical expenses for the purposes of section 159P of the ITAA 1936.

Although we acknowledge your child’s medical condition and the hardships you have subsequently endured, the legislation is very specific as to the circumstances under which a taxpayer is entitled to a medical expenses tax offset due to the legislative changes in relation to the phase out of the offset as mentioned above. The Commissioner is bound by the law and does not have the discretion to allow a claim if the expense does not fall within the legislation.