Medical Expenses Tax Offset

Tax Refund - A Grade Tax Accountants Penrith NSW


  • The Tax Office makes some provision, in the form of a tax offset, for those who are required to spend more than $1500 during the financial year on a variety of medical expenses.
    The Medical Expenses tax Offset is calculted at 20% of the excess of "net medical expenses" (that is out of pocket after reimbursements from either or both Medicare anda private health fund) over $1500. So, if you spend $2000, the offset is $$100 ($500 x 20%). The rebate can only be used to reduce tax liabilites and is not a "refundable" offset (ie. if you have not tax liability for the given year it does not generate a refund on it's own).
    There are some rules associated with the offset as follows:

    The medical expenses must be for:

  • • you
    • your spouse - married or de facto - regardless of their income
    • your children who were aged under 21 years, including adopted and stepchildren, regardless of their income
    • any other child aged under 21 years - not a student - whom you maintained and whose separate net income (SNI) was less than $1,786 for the first child and lessthan $1,410 for the second child and any subsequent children
    • a student aged under 25 years whom you maintained and whose SNI was less than $1,786
    • child-housekeeper, but only if you can claim a tax offset for them at item T1 on your tax return, or
    • an invalid relative, parent or spouse's parent, but only if you can claim a dependant tax offset for Parent, Spouse's parent or invalid relative.
    You and your dependants must be Australian residents for tax purposes, but you can claim medical expenses paid while travelling overseas. You can also include the medical expenses of your spouse and dependent children if they were waiting to migrate to Australia in 2008-09 and if you were taking the steps necessary for their migration in a timely manner.
  • Medical expenses which qualify for the tax offset also 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,
    • for nursing home - for example, aged care, and
    • for treatment under an in-vitro fertilisation program.

  • Expenses which do not qualify for the tax offset 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.
  • Please contact A Grade Tax Accountants Penrith on (02) 4731-1405 specialise in all types of taxation, accounting, tax returns, bookkeeping, self managed superannuation funds, tax advice and planning for Personal and Business clients.


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