ap_reb10

Medical expenses tax offset

Medical expenses rebate - 20% of what you spend in excess of $1,250

The rebate allowed

To get any benefit from this provision, you have to be v-e-r-y sick, or paying for the services of an expensive dentist or orthodontist

That is something of an exaggeration, but not by much

Section 159P (3A) contains the details...It says ...

Where a rebatable amount is applicable to a taxpayer (for medical expenses) and

That rebatable amount exceeds $1,250

the taxpayer is entitled to a rebate

- equal to 20% of the excess over $1,250

In other words - the first $1,250 of unrecouped medical expenses does not entitle you to any rebate.

For every dollar over $1,250, you get a rebate of 20 cents.

It should be noted that while there is a lower limit to the amount, in respect of which the rebate can be claimed, there is no upper limit.

After the first $1,250, it can all be claimed at 20 cents in the dollar

Whose medical expenses?

Section 159 P(1) includes medical expenses of the

taxpayer and

his dependants

(who are residents of Australia) in the rebatable amount.

Dependants are defined in section 159P(4) as

Spouse

child less than 21

any person in respect of whom a rebate is allowable as a section 159J(2) dependant (child housekeeper, invalid relative, parent or parent in law)

child or student child in respect of whom taxpayer is entitled to a notional dependant rebate.

Answer this question….

Would the following would be dependants for purposes of section 159 P?

Taxpayer's 2 week old child?

Yes No

Refer section 159P(4) definition

1500 less 1400 = 100 - refer section 159P(1)

Section 159P(1) includes medical expenses less any amount paid to the taxpayer (or any other person) by a ... Fund

Answer this question….

Now assume that a taxpayer spends $1500 on medical expenses on 29 June but has not claimed his refund, from the medical benefits fund, before filling out his return form

What amount would be included in his rebatable amount?

1500 less 1400 = 100 - refer section 159P(1)

Section 159 P(1) excludes amounts paid or to which the taxpayer or any other person is entitled to be paid.

What are medical expenses?

These are defined in section 159 P(4) as payments to a ...

	Legally qualified medical practitioner in respect of an illness or operation
	legally qualified nurse in respect of an illness or operation
	legally qualified chemist in respect of an illness or operation
	public or private hospital in respect of an illness or operation
	legally qualified dentist for dental services or treatment or the supply, alteration or repair of artificial teeth
	to a person registered under a law of a State or Territory as a dental mechanic in respect of charges lawfully made by that person for the supply, alteration or repair of artificial teeth
	for therapeutic treatment administered by direction of a legally qualified medical practitioner
	in respect of a medical or surgical appliance (not otherwise specified in this definition) prescribed by a legally qualified medical practitioner
	the testing of eyes or the prescribing of spectacles by a person legally qualified to perform those services the supply of spectacles in accordance with any such prescription
	as remuneration of a person for services rendered by him as an attendant of a person who is blind or permanently confined to a bed or an invalid chair
	for the maintenance of a dog used for the guidance of a blind person, being a dog that the Commissioner is satisfied is properly trained in the guidance of the blind by a public institution.

medical practitioners, nurses, chemists and hospitals in respect of an illness or operation….

Answer this question….

Would the following come within the definition of 'medical expenses'?

Payment to nursing home for aged?

(Home is approved as hospital under the National Health Act)

Yes No

If nursing home is approved under the National Health Act as a hospital it will qualify.

Answer this question….

Would the following come within the definition of 'medical expenses'?

Payment to qualified nurse to attend at the bedside of a sick taxpayer?

Yes No

Legally qualified nurse in respect of an illness or operation

Answer this question….

Would the following come within the definition of 'medical expenses'?

Payment to qualified nurse to look after children while mother is ill?

Yes No

Not in respect of illness or operation

Answer this question….

Would the following come within the definition of 'medical expenses'?

Cost of milk substitute from chemist for child with cows milk allergy?

Yes No

Probably no - therapy implies healing or curing - and abstinence from a particular food would not qualify ... But a serious allergy is an illness, so it probably depends on how serious the allergy is

Payments to a legally qualified dentist & to a registered dental mechanic

Payment for therapeutic treatment administered by direction of a legally qualified medical practitioner. (Direction of a medical practitioner implies more than a mere suggestion that some course of therapy might help)

Answer this question….

Would the following come within the definition of 'medical expenses'?

A doctor tells his patient that there is nothing more he can do for his back complaint, but suggests a chiropractor may be able to relieve the pain.

Would the chiropractor's fees be a medical expense?

Yes No

This would not be therapy by direction of a medical practitioner.

Answer this question….

Would the following come within the definition of 'medical expenses'?

A doctor refers his patient to a physiotherapist for treatment is the physiotherapy a medical expense?

Yes No

A doctor's referral would amount to a direction for therapy.

Payments for an artificial limb, eye or hearing aid

Payments for a medical or surgical appliance prescribed by legally qualified medical practitioner

Exactly what constitutes a medical or surgical appliance is open to question.

For many years the Review Tribunals held that a medical or surgical appliance must be manufactured and distributed solely as a medical or surgical apparatus.

Air-conditioning units, wigs etc were not allowed if they were identical with the products sold commercially to the public for domestic use.

This attitude is now disputed by some board members who argue that so long as the appliance is used for a medical or surgical end it will qualify.

Payments for testing of eyes and prescription of spectacles ... By a person legally qualified to perform such services and the cost of the spectacles

Services of an attendant for a person who is blind or permanently confined to an invalid chair.

Maintenance of a guide dog for a blind person.

Sections 5 to 8 of section 159P make it clear that payments to employers of the providers of the defined medical services amount to payments to those providers.