On 14 May 2013, the government announced in the 2013-14 Budget that it will phase out the net medical expenses tax offset. From 1 July 2013, taxpayers who received the offset in their 2012-13 income tax assessment will continue to be eligible for the offset for the 2013-14 income year if they have eligible out-of-pocket medical expenses above the relevant claim threshold. Similarly, those who receive the tax offset in their 2013-14 income tax assessment will continue to be eligible for the offset in 2014-15.
The changes however, will not apply to all taxpayers – the offset will continue to be available for taxpayers with out-of-pocket medical expenses relating to disability aids, attendant care or aged care expenses until 1 July 2019.
If your medical expenses for yourself or your dependents were more than $2,060 for the 2012 financial year, you may be entitled to claim a tax offset of 20% of the excess over $2,060.
To claim the offset, the medical expenses must be for:
•your spouse, either married or de facto – regardless of their income;
•your dependants – children who were aged under 21 years, including adopted and stepchildren, regardless of their income;
•any other child aged under 21 years and not a student, who you maintained and whose Adjusted Taxable Income (ATI) was less than $1,786 for the first child and less than $1,410 for the second child and any subsequent children;
•a student aged under 25 years whom you maintained and whose ATI was less than $1,786;
•a child-housekeeper, but only if you can claim a tax offset for them;
•an invalid relative, parent or spouse’s parent, but only if you can claim a dependant tax offset for them.
What medical expenses qualify for the medical expenses offset?
•to dentists, orthodontists or registered dental mechanics
•to opticians or optometrists, including for the cost of prescription spectacles or contact lenses
•to a carer who looks after a person who is blind or permanently confined to a bed or wheelchair
•for therapeutic treatment under the direction of a doctor
•for medical aids prescribed by a doctor
•for artificial limbs or eyes and hearing aids
•for maintaining a properly trained dog for guiding or assisting people with a disability (but not for social therapy)
•for laser eye surgery, and
•for treatment under an in-vitro fertilisation program.
Expenses which do not qualify as medical expenses include payments made for:
•cosmetic operations for which a Medicare benefit is not payable
•dental services or treatments that are solely cosmetic
•therapeutic treatment where the patient is not formally referred by a doctor (a mere suggestion or recommendation by a doctor to the patient is not enough for the treatment to qualify; the patient must be referred to a particular person for specific treatment)
•chemist-type items, such as tablets for pain relief, purchased in retail outlets or health food stores
•inoculations for overseas travel
•non-prescribed vitamins or health foods
•travel or accommodation expenses associated with medical treatment
•contributions to a private health insurer
•purchases from a chemist that are not related to an illness or operation
•life insurance medical examinations
•ambulance charges and subscriptions, and
Records that need to be kept include details of:
•medical expenses you paid
•refunds of these expenses which you or any other person has received, or are entitled to receive, from Medicare or a private health insurer.
•chemists where you had prescriptions filled and what was purchased.
Here at The Quinn Group, our experienced team of Tax Agents and Tax Accountants can assist with your Individual Tax Return. If you require further information, speak to us today about the best way to legally reduce your taxation liability. There is no time to waste! Submit an online enquiry or call 1300 QUINNS (784 667) or +61 2 9223 9166.