FocusOn - Medical expenses
There is a 20% tax offset available for families with net medical expenses in excess of $2,000 in the 2011 financial year.
For each year after 2011, the threshold will be indexed annually.
Who qualifies for the tax offset?
The offset applies to medical expenses paid by an individual for themselves and their dependants. For the purposes of this offset, dependants include your spouse and your children (includes adopted, stepchildren, ex-nuptial children and children of your spouse) under the age of 21, regardless of their income. Other children that you maintained under the age of 21 whose income is less than $1,410 or those you maintained under the age of 25 undertaking full-time studies whose income is less than $1,786 are also considered your dependant.
The portion of medical expenses that are reimbursed by your health insurer or Medicare will not be eligible for the rebate. In order to qualify for the offset, your out-of-pocket medical expenses (after refunds from Medicare and/or your private health insurer) must exceed $2,000 in total.
Eligible medical expenses
Not all medical expenses are eligible for the medical expense tax offset. Solely cosmetic procedures are not eligible for the offset. These include beautifying or superficially altering. Cosmetic procedures for legitimate medical needs (such as reconstructive surgery) can still be included. If there is no Medicare benefit payable in respect of the cosmetic procedure the expense is likely to be an ineligible medical expense.
Payments to doctors, nurses and pharmacists
Payments to legally qualified medical practitioners, nurses and pharmacists will qualify for the tax offset if they are in respect of an illness or operation. Life insurance, medical examinations and vaccinations before overseas travel are not eligible medical expenses.
Prescribed and non-prescribed medications
The cost of medication purchased from a legally qualified chemist will qualify for the medical expense tax offset if it is purchased in respect of an illness or operation, even if that medication was not prescribed by a doctor. Examples include pain relief tablets and cough medicine.
The tax offset will not apply to chemist-type items such as those mentioned above if they are purchased from another retailer such as a supermarket or health food store.
Therapeutic treatment
Therapeutic treatment for healing and curing purposes includes the following:
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Physiotherapy, osteopathy, chiropractic treatment and massage |
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Dietician's treatment |
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Speech therapy |
Therapeutic treatment may qualify for the medical expense tax offset provided that treatment is administered at the direction of a medical practitioner. Your doctor must first refer you to a specific practitioner in order for the treatment to be eligible.
Vitamins and health foods
In most cases vitamins, health foods and other similar items will not qualify for the tax offset as they are not considered to be in respect of an illness or operation. To be eligible for the tax offset vitamins would have to be specifically prescribed by a medical practitioner for the treatment of an illness or condition.
Dental & optical treatment
Payments to a dentist for dental services or treatment will qualify for the medical expense tax offset, unless they are solely cosmetic. Eligible expenses include orthodontic treatment and the supply and repair of false teeth. Cosmetic treatments such as teeth bleaching are not eligible expenses.
Payments made to optometrists and eye specialists are also eligible for the tax offset. This includes payments for eye tests, prescription glasses and contact lenses. Surgery to correct your vision is also included.
Surgical appliances
The cost of artificial limbs and hearing aids are eligible medical expenses. Other surgical appliances will qualify for the tax offset where these are prescribed by a medical practitioner. Such items include adhesive plaster and bandages, wheelchairs and crutches.
Hospitals, hostels and nursing homes
Payments made to hospitals in respect of an illness or operation will qualify for the tax offset, provided the treatment is not solely cosmetic.
Recipients of approved aged care for permanent or respite care can also claim this tax offset for payments made to residential aged care facilities such as hostels and nursing homes provided that the payments were made:
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The an approved aged care provider under the Aged Care Act 1997, and |
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For personal or nursing care, not just for accommodation. |
A recipient of approved care is a person who has been assessed by an Aged Care Assessment Team (ACAT) as requiring high or low level care.
Examples of payments for personal or nursing care include daily fees and income tested daily fees. Accommodation bonds are solely for accommodation and not for personal or nursing care, therefore they do not qualify for the medical expense offset. Further, payments to retirement villages will not qualify for this tax offset.
Claiming the tax offset?
Receipts for medical expenses need to be retained. You should identify the gross amount of each payment and any refunds received from your health insurer or Medicare. We have prepared a spreadsheet to assist you in summarising your medical expenses.
Please note some pharmacists can give you an annual statement showing all medications charged during the year. In most cases this will only list prescription medicines, unless you have an account.
You can request an annual statement from your health insurance provider and from Medicare which will show receipts presented and benefits paid.
Published : July 2011