If your net medical expenses exceed $2,000 for financial year ending 30th June 2011, then you may be eligible for a 20% tax offset for all amounts over the $2,000 threshhold.

Your net medical expenses is the balance that you have paid out of your pocket after health insurance and Medicare have contributed to the cost of the medical expense.

The Medical expenses used to claim the offset may be for yourself, your spouse (only 1 person per couple should make the claim otherwise 2 by $2,000 thresholds apply), children under 21 (including your adopted children, stepchildren, ex-nuptial children or children of your spouse) . Please note that other children may qualify, either contact your accountant or the Australian Taxation Office.

Medical expense that can be included as part of the tax offset need to be paid to legally qualified doctors, nurses or chemists and public or private hospitals.

To be eligible for the Medical Expense tax offset, payments need to be paid to the following medical professionals:-

  • 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.

To be able to claim this tax offset you must be a resident of Australia for taxation purposes. Medical expenses while travelling overseas on holiday qualify as long as they are paid to a legally qualified professional in the above group.

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.

 

44 Comments

  1. Do you know if you can carry your medical expences on to the next tax year if you do not reach the threshold of $2000

    1. Janet, unfortunately no carrying forward of medical expenses, it is only the medical expenses in that financial year. Some expenses like dental, glasses, hearing aides you has some control over so it may be possible to lump them in to one financial year to get the most out of the rebate.

  2. Is this means tested or is anyone eligible?

    1. Mez, No it is not means tested, there is no income thresholds that stop you from claiming the tax offset.
      However as with most tax offsets the taxpayer can only offset up to the amount of tax that is due. ie tax due is $500 and the offsets equals $700, the total offsets can’t be greater than the $500 of tax due.

  3. Can I claim my gym membership where my doctor has made an exercise plan and the exercise counteracts an illness?

  4. Hi

    What happens if you pay an expense during the year but don’t submit it to Medicare or your private health insurance before 30 June 2011 and its an expense you’ll probably get money back for and your over the $2000. Do you include the full expense in your calculation of the rebate? What happens if you eventually get a refund from Medicare/PHI?

    1. I would make sure that I had received the payments from Medicare and your private health insurance before lodging the tax return and put the net expense in as the claim.

  5. Hi
    Can you claim books about your child’s medical condition and training courses about the condition? Also, how about sensory toys/aids for Autism?
    Regards
    Megan

    1. Megan, I think that the expenses you describe do not form part of the eligible medical expenses.

  6. As a family we are over $2000. My question is I would like to claim it, but when using etax and when I go to download medicare expenses, it tells me that you cannot take those that are over 18. This is confusing. Does my husband have to claim his medicare expenses?

  7. If I incurred medical expenses in May, though did not finalize the account until July, which financial year do I claim the out of pocket expense in? The financial year the expense occurs, or the financial year I paid the invoice?

  8. Hi,

    Is there anyone know what happened if you pay more than 2000$ to a dentist when you are out of Australia for holiday ( during the financial year) ?

  9. What if I went overseas for medical treatment? Can it be claimed as an offset?

      1. No offence, but medical expenses paid during an overseas trip may be rebatable.

        1. No offence taken, I have mentioned before that the expenses that can not be claimed, are for travellying overseas specifically for a medical treatment. However if you are travelling overseas on holiday and need medical treatment those expenses net of insurance can be claimed.

  10. I have only just realised I can do this, however, did not claim my dental expenses (well over $4000) the last time I had my tax done. Can I ‘back-claim’?

  11. The ATO website says “you can include medical expenses paid while travelling overseas.”

    1. It certainly does Ingrid, so if you are travelling overseas on holiday and need medical treatment those expenses net of insurance can be claimed. To go overseas specifically for a medical treatment, those expenses can not be claimed.

  12. What exactly does Tax Offset mean ? If I have medical expenses of $12000 that means I can claim $2000 as a tax offset. Do I get that 2k back fully or is it taken off my taxable income which means I probably only get something like $500. Please enlighten me Ta

    1. A tax offset directly reduces the tax payable, so in your example you would get the full 2k back.

      A tax deduction reduces your taxable income and then in turn reduces your tax payable by the relevant tax rate.

  13. Does this mean we (my family) could claim 20% for all therapy we pay for our son with Autism that is provided by a psychologist or someone under her supervision (which is paid for out of our pocket)?

    1. “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.”
      If this is the case then no you can’t claim, but if the Doctor does a formal referral to the therapist then you can claim the rebate.

  14. Hi, can you claim items purchased from the chemist that were recommended from a dr eg iron tablets while I was pregnant, cream recommended by a dermatologist or panadol? Thanks.

  15. Hi,

    Can you pre-pay a doctor for a surgery that is going to occur early in the next financial year and claim that in your current year return?

    Thanks

  16. Does the 20% off-set threshold of $2000 increase after the 30th of June 2012 to $5000, or stay at $2000 ?

    1. The threshold is increasing to $2,060 as from the 1st July 2012 if your adjusted taxable income is less than $84,000 for an individual or $168,000 for a family. If your adjusted taxable income is greater than those amounts then a threshold of $5,000 applies.

  17. My daughter has been having orthodontic treatment now for over three years and still has about a year to go.This has cost us around $10,000 dollars..I have only just found out that i am able to claim her expenses. Am i able to claim all the expenses from the past 3 years as it is still for the same treatment.I am not in a private fund.

    1. Sharon, you can amend previous years tax returns and claim for the medical treatment, don’t forget to add other applicable medical expenses as per the post.

  18. My husband (dependent spouse) recently passed away and I paid for his funeral expenses. I saw a statement on a funeral house website for Berry Funerals that said some funeral expenses may be claimable for a dependent spouse. could you please advise what expenses I can claim. thank you.

    1. S&K, I am sorry for your loss, but unfortunately there are no deductions or claims that can be made in regards to a funeral. From the ATO website “Funeral expenses are not tax deductible nor are they eligible for the medical expenses tax offset.”

  19. Geoff, you mentioned on July 4,that most tax offsets the taxpayer can only offset up to the amount of tax that is due. If the amount of tax due is an amount greater than the medical offset and I have happen to have franking credits, which gets offset first?

    1. Franking Credits, Education Tax Refund and the Private Health insurance rebate you will receive the full amount. So if an amount of tax is due of $1,000 and you have $2,000 of offsets which include $500 of franking credits then a refund of $500 (the amount of the franking credits) would be expected.

  20. Hi

    In relation to medical expenses incurred overseas, you have stated that this only relates to expenses incurred whilst travelling. However the legislation does not seem that specific.

    Subsection 159P(4) of the ITAA 1936 defines medical expenses to include payments to a legally qualified medical practitioner, nurse or hospital in respect of an illness or operation.

    However, it does not seem necessary that the payments be made to an Australian resident or that they are paid in Australia. Medical expenses paid during an overseas trip should generally qualify for the tax offset. There is no specific requirement that it has to be whilst on holiday as such as you seem to be intimating.

    It would seem that if you have treatment for a disease which is administered by legally qualified medical practitioners overseas the costs are eligible medical expenses for the purpose of the medical expenses tax offset and you are entitled to include the cost of the treatment as expenses when calculating the medical expenses tax offset under subsection 159P(1) of the ITAA 1936.

    In my case, I had numerous trips overseas for medical treatment by a qualified medical practitioner (because the treatment was not available in Australia although this is not relevant for the claim)and all such costs were claimable as a tax offset. This was confirmed by the ATO numerous times.

    1. Gary, I had a client that needed to travel overseas for medical expenses a couple of years ago, I phoned the ATO for clarification and was told contrary to your situation.

      Maybe the next time an overseas trip for medical expenses arises I will apply for a Private Ruling

      Thank you for your input.

  21. Hi Geoff,
    My childs paed specifically referred us to a social therapy group for my children on the Autism spectrum however I did not recieve this in writing and the provider does not issue receipts..im up the creek without a paddle right? Paed also as part of treating our children heavily pushed swimming lessons..again i cant claim these can I?

  22. My wife and I have combined medical expenses well over the threshhold, and we are both taxpayers. Can we decide which partner declares the expenses (ie the one that would get the higher offset or rebate) or is there a rule as to which one makes the claim, eg the one with the higher expenses? I do not see this clarified in the ATO website.

    1. You certainly can decide who can claim the offset, make sure that who ever claims the offset has paid enough tax to make full use of the offset.

  23. Hi Geoff,
    I rang the ATO regarding which expenses we can claim but they were not helpful they only read what was in Etax and gave me no extra info.

    In my family of 5 we have had visits to a psychologist, psychiatrist, physiotherapist and podiatrist. We did get a doctor’s referral for the psychiatrist and the psychologist and the podiatrist (just for my husband and son). For my back problems I got a referral from my GP to the physio who gave me exercises etc and suggested verbally that I see a podiatrist. The podiatrist made me orthotics and sent a letter to the physio telling her what he had done. Is this enough of a paper trial to say that in essence I was referred to a podiatrist or not i.e. I was referred by a GP to the physio who suggested I go the podiatrist.

    Can we claim PBS presciptions as well as acne creams etc which a GP told us to buy?

  24. Hi Geoff,
    I was referred by my GP to a physiotherapist. I saw her twice but was unhappy with her treatment so I went to a sports physio I had heard about. I have had ongoing treatment there and my GP is aware of this. This physio referred me to another doctor who has recommended I keep seeing this physio. Would the cost of the second physio be claimable or because I was not formally referred to them specifically, am I ineligible to claim these costs? Thanks in advance.

  25. Can the cost of hearing aids be claimed as a 100% income tax deduction? My mother recently got them and was under impression from the specialist that it could be claimed fully as she required them to be able to work as an office manager. The specialist has provided her with a letter stating that hearing aids are required to correct the hearing problems she is having at work.
    Thankyou

    1. Would be great if hearing aids were tax deductable, I would have recieved a savings in tax on my last set, but unfortunatley thay are not tax deductable as the are a personal use item. The best that can be done is to claim the 20% Net Medical Expenses Tax Offset. Dont forget to use other medical expenses for the year to increase the offset recieved.

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