Did you know that you can claim your medical tax offset for medical expenses paid for or on behalf of dependants in your tax return? A medical tax offset can be claimed for you, your spouse, your children and even possibly an invalid relative.
The medical tax offset is calculated based on your net out of pocket expenses. That is your total medical expenses less any refunds that either yourself or your dependants have received or are entitled to receive. This includes refunds from both Medicare and your private health insurer.
You can claim the following for your medical tax offset:
- illness or operation expenses paid to legally qualified doctors, nurses or chemists and private or public hospitals.
- Dentist, orthodontist or registered dental mechanic expenses
- Optician or optometrist expenses, including the cost of prescription spectacles or contact lenses
- Expenses for a carer who looks after a person who is blind or permanently confined to a bed or wheelchair
- Therapeutic treatment expenses under the direction of a doctor
- Expenses for medical aids prescribed by a doctor
- Expenses for artificial limbs or eyes and hearing aids
- Expenses for maintaining a properly trained dog for guiding or assisting people with a disability (but not for social therapy)
- Expenses for laser eye surgery, and
- Expenses for treatment under an in-vitro fertilisation program.
You may also be able to claim the medical tax offset for payments made to nursing homes or hostels (not retirement homes) if the payments were:
- made to an approved care provider, and
- for personal or nursing care, not just for accommodation.
Expenses which do not qualify for the medical 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.
If you are eligible to claim the medical tax offset you will need evidence to provide to your accountant at tax time.
- Keep all receipts and details of refunds related to medical expenses for yourself and any dependant you may be claiming for.
- If the receipt is on fading paper, take a copy of the receipt or scan it and also keep notes on the back of it with notes of the treatment received. This will make it easy for the accountant to ensure what you are claiming is eligible.
You can also ask for an itemised statement from:
- Medicare (your accountant can also assess this on your behalf)
- your private health insurer
- chemists where you had prescriptions filled. (A good idea is to only use the one pharmacy as they are able to give you a print out at the end of the financial year)
Some of the items shown on these statements may not qualify as medical expenses for the purpose of claiming the medical tax offset. You will need to exclude these items when calculating your allowable medical expenses.
Strategies to consider to MAXIMISE the medical tax offset:
If you are in a position to bring forward further medical expenses (such as dental work or elective surgery) by maximising the medical expenses in one year instead of spreading over two years you may be able to maximise your benefit, especially if your usual medical expenses are below the threshold. :
The medical tax offset threshold for 2010-11 is $1500 and $2000 in 2010-11
How much difference will the tax offset make?
Karen and her husband David have 3 children. In the 2010-2011 financial year, they collect their receipts and work out they have spent $3000 in eligible medical expenses. They also calculate they have received $500 back in rebates already. Based on these figures, they are eligible for a $200 medical tax rebate.
|Add up all your allowable medical expenses.||$3000||(a)|
|Add up all the refunds of these expenses which you or any other person has received or are entitled to receive.||$500||(b)|
|Take (b) away from (a). This is your net medical expenses amount.||$2500||(c)|
|Take $1,500 away from (c).||$1000||(d)|
|If the amount at (d) is $0 or less, you cannot claim a tax offset.|
|Divide (d) by 5 (to get 20%). The amount at (e) is your medical expenses tax offset.||$200||(e)|
For more information, please refer to the ATO website.