What Medical Expenses Can I Claim For Tax?

The Tax Offset

When you pay out-of-pocket medical expenses, you may be eligible for the net medical expenses tax offset. The tax offset allows you to claim back a percentage of the costs exceeding the medical expense threshold.

Eligibility for 2013 Financial Year

For the first time, the net medical expense tax offset is subject to income testing.

The amount you are entitled to claim is based on your adjusted taxable income. Adjusted taxable income is calculated as taxable income + reportable employer superannuation contributions + deductible personal superannuation contributions + adjusted fringe benefits + certain tax–free government pensions + target foreign income + net financial investment loss + net rental property loss - child support paid.

Singles Adjusted Taxable Income $0-$84,000 Over $84,000
Couples Combined Adjusted Taxable Income $0-$168,000 Over $168,000
Medical Expense Threshold $2,120 $5,000
Rate of offset applied to excess 20% 10%

Note: The Adjusted Taxable Income threshold increases by $1,500 for each dependent child after the first.

Eligibility for 2014 Financial Year and Beyond

The Government announced in the May 2013 Federal Budget that the net medical expense tax offset will be phased out.

It is proposed that from 1 July 2013, the offset will cease unless you received it in the 2013 financial year or if you are eligible to claim it for disability aids, attendant care or aged care. The offset will continue to be available for these limited expenses until 1 July 2019 when Disability Care Australia is expected to be fully implemented.

These changes are yet to be legislated and it is likely they will be dependent on the outcome of the federal election.

Claimable Medical Expenses

  • Payments to GPs, nurses and specialist medical practitioners in respect of illness or operation
  • Dental and orthodontic expenses
  • Optical expenses including glasses, contact lenses and laser eye surgery
  • Medical aids and artificial limbs prescribed by a doctor
  • Therapeutic treatments under the direction of a doctor
  • A carer to look after a person who is blind or permanently confined to a bed or wheelchair
  • Costs of maintaining a guide dog
  • Treatment for IVF
  • Residential Aged Care expenses
  • Pharmacy expenses in respect of illness or operation

Non-Claimable Medical Expenses

  • Health insurance and ambulance cover payments
  • Non–prescribed vitamins and supplements
  • Purely cosmetic procedures
  • Vaccinations
  • Pain relief or other medication purchased not from a chemist
  • Therapeutic treatments not formally referred by a doctor
  • Travel and accommodation related to treatment
  • Pharmacy expenses not in respect of illness or operation
  • Medical examinations for life insurance purposes

Record Keeping

In order to claim the tax offset, you will need to have a record of expenses paid and refunds received or receivable from Medicare and your private health insurer. You are able to request an annual report of this information from your health insurer, Medicare and your local pharmacy in order to assist with your record keeping obligations.

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