For those asking the question ‘can you claim medical expenses on tax?’, there is no simple answer. Individuals who have incurred out of pocket expenses for themselves or their dependents in the 2014 financial year may be entitled to claim a tax offset. To do so they will need to deduct any reimbursed amounts from Medicare or private health insurance from their total eligible expenses.
To be eligible to claim this offset, individuals must have either received this offset in their 2012-13 income tax assessment or have paid for medical expenses relating to attendant care, disability aids or aged care.
For those who received this offset in their 2012-13 income tax assessment, there are no changes to the type of net medical expenses that they may claim, but if this offset was not received with their income tax assessment then individuals are eligible to only claim expenses that pertain to attendant or aged care and disability aids.
In Australia the Net Medical Expense Tax Offset is subject to income testing. Based on certain thresholds, taxpayers can claim a reimbursement of 10% for eligible out of pocket expenses incurred in excess of $5,100 annually. These thresholds include above $88,000 for singles or $176,000 for families or couples in 2013-214. The family threshold increases by $1,500 for every dependent child after the firstborn.
Taxpayers who have taxable incomes below these thresholds are eligible to claim a reimbursement of 20% for net medical expenses over $2,162 annually.
When calculating net medical expenses, only amounts paid for dependents who are Australian residents for tax purposes should be included.
This includes the tax paying individual, their spouse, children under 21, whether adopted, step children, ex-nuptial or those of the spouse. Any other children who were maintained by the tax paying individual but was not a student also needs to be accounted for.
Additionally, a full time student under the age of 25 who was maintained by the taxpayer, a child house-keeper, an invalid relative or parent, or a spouse’s parent and a dependent who is either an invalid or carer are all included in this criteria.
What can you claim medical expenses on tax:
• Payments made to medical staff including doctors, nurses or chemist for treatment of an illness or operation on the individual or their dependents
• Payments made to dental specialists including orthodontists, dentist or registered dental mechanics
• Payments regarding prescription spectacles or contact lenses that were made to optometrists or opticians
• Any payment that has been made to a caregiver looking after a blind person or one who is confined to a wheelchair or bed
• Any therapeutic treatment carried out under instruction of a doctor
• Expenses incurred on the purchase of hearing aids, artificial limbs, eyes, laser eye surgery or treatment in an IVF program
• Residential age care expenses, or those made to nursing homes or hostels
• Maintenance of a properly trained dog for assisting or guiding individuals with a disability
What you can’t claim medical expenses on tax:
• Cosmetic surgery not payable by Medicare
• Cosmetic dental treatment or surgery
• Vaccinations for overseas travel
• Non-prescribed health foods or vitamins
• Accommodation or travel expenses linked with medical treatment
• Life insurance medical examinations or contributions made to private insurance
• Subscriptions, ambulance charges or funeral expenses
Requirements on whether you can you claim medical expenses on tax:
To file claims on these expenses, individuals need to maintain detailed records of medical expenses along with any funds they may have received or are entitled to receive from their private health insurance or Medicare. Receipts of all prescriptions purchased from a pharmacist also need to be attached as proof.
To assist with determining the payment of medical expenses, individuals can request an itemised statement from Medicare, their private health insurance company as well as from any chemist where they may have had their prescriptions filled.
1. Out of pocket medical expenses: http://www.hrblock.com.au/out_of_pocket_medical_expenses
2. Offsets you can claim in medical expenses: https://www.ato.gov.au/Individuals/Income-and-deductions/Offsets-you-can-claim/Medical-expenses/