Net Medical Expenses Tax Offset Phase Out

medical expenses tax offset phase out

In 2013, the Government announced a program to phase out the Net Medical Expense Offset, to occur between 2013 and 2019.

Net medical expenses are your total medical expenses, less refunds from Medicare and private health insurers, which you, or your dependents, paid during the financial year.

For most taxpayers, the phasing out program removes any entitlement to claim a Net Medical Offset in their 2016 tax return.

From 2015–2016 until 2018–2019, claims for this offset are restricted to expenses for disability aids, attendant care and aged care.

Disability Aids

Disability aids are defined as items manufactured as, or generally recognised to be, an aid to the functional capacity of a person with a disability. Generally, this does not include ordinary household or commercial appliances. For example, the purchase of a wheelchair or the maintenance of a guide dog are disability aids—they help a person’s daily living activities, provide assistance to alleviate the effect of the disability and enable increased participation in society.

Attendant Care

Attendant care expenses relate to services and care provided to a person with a disability to assist with everyday living. For example, the provision of personal assistance, home nursing, home maintenance, and domestic services.

Aged Care

Aged care expenses include services and accommodation provided by an approved aged care provider to a person who is a care recipient or continuing care recipient within the meaning of the Aged Care Act 1997.

Income Testing

In addition, it should be noted that this tax offset is income tested. The percentage of net medical expenses you can claim is determined by your adjusted taxable income (ATI) and family status:

  • Single:
    • ATI of $90,000 or less: you can claim 20% of medical expenses over $2,218
    • ATI of over $90,000: you can claim 10% of medical epenses over $5,233
  • Family:
    • ATI of $180,000 or less: you can claim 20% of medical expenses over $2,218
    • ATI of over $180,000: you can claim 10% of medical expenses over $5,233

For further information, please visit our page on Net Medical Expenses Offset, or contact the friendly team at Online Tax Australia with any questions you might have.

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