Out of pocket medical expenses

If you are out of pocket more than $2,120 for medical expenses for you and your dependants in the 2013 financial year, you may be entitled to claim a tax offset of 20% of the excess over $2,120*.  To determine the out of pocket amount you must deduct from the total of the eligible expenses any amounts reimbursed to you.

Tax payers with an adjustable taxable income above the Medicare Levy surcharge thresholds ($84,000 for singles and $168,000 for a couple or family in 2012-13) would be able to claim 10% of out-of-pocket medical expenses incurred in excess of $5,000.

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 – who you maintained and whose Adjusted Taxable Income (ATI) was less than $1,786 for the first child and less than $1,410 for the second child and any subsequent children
  • a student aged under 25 years whom you maintained and whose ATI was less than $1,786
  • a child-housekeeper, but only if you can claim a tax offset for them
  • an invalid relative, parent or spouse’s parent, but only if you can claim a dependant tax offset for them.

Medical expenses which qualify for the tax offset also include payments:

  • Payments to legally qualified medical practitioner, nurse or chemists in respect of illness or operation on you or your dependants.
  • 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 treatment under an in-vitro fertilisation program
  • residential aged care expenses
  • payments made to nursing homes or hostels (not retirement homes) for an approved care recipient’s permanent or respite care, provided the payments were made to an approved care provider and were for personal or nursing care – not just for accommodation.

Non-claimable expenses – 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 treatment 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 purchased in retail outlets or health food stores, such as tablets for pain relief
  • vaccinations for overseas travel or for protecting the taxpayer from illness (such as Hepatitis C) even if required by employer
  • 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

What records do you need to keep?

  • details of the medical expenses you wish to claim
  • details of refunds you received, or are entitled to receive, from Medicare or a private health insurer
  • a list of prescriptions purchased from a pharmacist

* The threshold is indexed annually.

We have record cards available for you to use to keep the necessary records.

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