Navigating the Funding Maze – Medical Expenses Tax Offset
Welcome to the fifth installment of ‘Navigating the Funding Maze‘. Today I hope to give alittle more insight into the Net Medical Expenses Tax Offset. I hope that this will be useful information.
What is the Net Medical Expenses Tax Offset?
If your net medical expenses are over the ATO threshold (from 2010-2011 Tax Year it is $2000, previously $1500) , you can claim an offset of 20 per cent (20 cents in the dollar) in your tax return.
To claim the medical expenses tax offset in your tax return, you need to know the total amount of medical expenses you incurred for yourself and your dependants. You then deduct any refunds from Medicare Australia, your private health fund or any other reimbursements that relate to those expenses receiving during the financial year.
There is no upper limit on the amount you can claim.
What can I claim?
It is important when you are looking at the Net Medical Expenses Tax Offset to consider all of the relevant Autism expenses (more on this below) but also your other medical expenses. including
Medical expenses include payments:
- to GPs that charge over the scheduled fee
- 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.
So does Autism Therapy count towards the Net Medical Expenses Tax Offset?
Ok … this is where things start to get a bit legal … and my knowledge only really relates to ABA therapy and my own experiences … The short version is yes but it only includes direct therapy costs (costs for Supervisors/Psychologists, Senior Behaviour Therapists, Junior Behaviour Therapists and Speech Therapists) and not any tools, books, toys etc where it has been recommended/refereed and under the direction of a medical practitioner. The appropriate rulings that are worth looking at are ATO Interpretative Decision 2011/82 and edited version of private ruling 4119 and 6093 (however I think that these have been withdrawn and replaced … your tax profession would know the most up-to-date reference).
From what I understand the key aspect to what is covered is that “therapeutic treatment must be at the direction of a legally qualified medical practitioner in order to be considered a medical expense for the purposes of the medical expenses tax offset” however “the treatment need not be administered by such a practitioner”. (ATO 2001/243)
What should I do now?
1. Talk to your accountant, taxation agent or other appropriate financial advisor. Let them know before your appointment what you want to discuss. Get from them a understanding on what is covered, what isn’t and what/how you need to keep your records so that you can make the most out of what is available. It is alot better to get this done ASAP and get advise that relates to your own unique circumstances. What is right for me is probably is not right for you. And preferably do this before tax time. Being prepared can save you alot of money
2. Talk to your doctor. You probably already have got the Health Care Plans etc … but make sure that they are up to speed with what you are doing and you have in writing a appropriate “referral” to cover you for tax purposes.
Just to be clear … the information above is not intended to be taken as legal, taxation or financial advise. The purpose is for information purposes only. I strongly recommend that you speak to an accountant, taxation agent or other appropriate financial advisor to get specific advise on your own situation.
(Image: Income Tax Return and Calcualtor by Images_of_Money, on Flickr – Attribution 2.0 Generic (CC BY 2.0)