Net medical expenses are the medical expenses you have paid, minus any refunds of these expenses which you or any other person has received, or are entitled to receive, from Medicare and/or a private health insurer. Many taxpayers are unaware that you can claim a tax offset of 20% (that is, 20 cents in the dollar) of your net medical expenses over $2,000. There is no upper limit on the amount you can claim.
The medical expenses must be for you, your spouse, or your children who were under 21 years old (including your adopted children, stepchildren, ex-nuptial children and children of your spouse.) These medical expenses can also potentially be for any other child under 21 years old whom you maintained and who was not a student. As well as potentially for a student under 25 years old whom you maintained, a child-housekeeper, or an invalid relative, parent or spouse’s parent.
You and your dependants must be Australian residents for tax purposes, but you can include medical expenses paid while travelling overseas. You can also include medical expenses relating to an illness or operation paid to legally qualified doctors, nurses or chemists and public or private hospitals. However, expenses for some cosmetic operations are excluded.
Medical expenses include payments:
• 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
• funeral expenses.
Residential aged care expenses
You can include payments made to nursing homes or hostels (not retirement homes) for an approved care recipient’s permanent or respite care if the payments were made to an approved care provider, and for personal or nursing care, not just for accommodation. An approved care recipient’s residential aged care payments usually include an amount for personal or nursing care if the recipient has an aged care assessment team (ACAT) assessment that they require either low or high-level care.
Residential aged care payments can be for:
• daily fees
• income tested daily fees
• extra service fees, and
• accommodation charges, periodic payments of accommodation bonds or amounts drawn from accommodation bonds paid as a lump sum.
Here at The Quinn Group our experienced team of accountants and tax agents can assist you in understanding what medical expenses you can and can’t claim in your tax return. For more information about the medical expenses tax offset or for any other tax advice submit an online enquiry or call us on 1300 QUINNS (784 667) or on +61 2 9223 9166 to book an appointment.