Claiming Medical Expenses in your Tax Return

Claiming medical expenses on your annual tax return is something every day Australians may miss when completing their returns alone. You can miss out on countless entitlements, leaving you out of pocket.

It’s important to have an understanding of the rules surrounding a medical tax claim, even if you don’t intend to lodge one this year. Here’s an outline of current ways to claim tax back on your medical expenses this financial year from the tax agents at Online Tax Return.

NOTE: The net medical expenses tax offset is being phased out. From 2015–16 until 2018–19, claims for this offset are restricted to net eligible expenses for disability aids, attendant care or aged care.

Can I even lodge a tax claim for these medical expenses?

If you meet one of the following two sets of requirements, you are able to claim tax back on your medical expenses within a financial year:

  1. If you maintained an individual who was your
    1. Spouse;
    2. Dependent child;
    3. Spouse’s dependent child;
    4. Parent; or
    5. Spouse’s parent
  2. And received one of the following:
    1. Disability support pension under the Social Security Act of 1991;
    2. Special needs disability support pension under the Social Security Act of 1991; or
    3. Invalidity service pension under the Veterans’ Entitlement Act of 1986.

OR

  1. You maintained an individual carer who was:
    1. Your spouse;
    2. Your parent; or
    3. Your spouses’ parent
  2. And they cared for your or your spouse’s child aged 16 years or older, or your or your spouse’s sibling aged 16 years or older
  3. And they:
    1. Received a carer payment or carer allowance under the Social Security Act 1991 for the care provided that person, or
    2. Have been wholly engaged in providing care to a person receiving:
      1. A disability support pension under the Social Security Act 1991;
      2. A special needs disability support pension under the Social Security Act 1991; or
  • An invalidity service pension under the Veterans’ Entitlement Act 1986.

In order to determine the out of pocket amount, you must deduct amounts reimbursed to you from the total of the eligible expenses.

The Net Medical Expenses Tax Offset

Subject to income testing, this offset affects taxpayers with an adjusted taxable income above $90,000 for singles, or $180,000 for a couple or family. The family threshold increases by $1500 for each dependent child after the first.

If you adjusted income is above these thresholds, you can claim a reimbursement of 10% for qualifying net medical expenses incurred over $5,423.

Taxpayers with an adjusted taxable income below these thresholds can claim a reimbursement of 20% for qualifying net medical expenses over $2299, when they lodge their return.

What can I include in my medical tax claim?

Eligible expenses include payments made to a carer who looks after a person who is blind or permanently confined to a bed/wheelchair; for a disability aid prescribed by a doctor; for artificial limbs or eyes or hearing aids, for maintaining a trained guide dog, or for residential or in-home aged care.

A disability aid is defined as an instrument, apparatus or device generally recognised to be of aid to the function, quality or capacity of a person with disability.

Wheelchairs or maintenance of a guide dog are examples of disability aids, as they assist in the person’s everyday activities. They provide assistance and alleviate the effect of their disability while improving their quality of life.

Disability is defined as restriction or impairment which has lasted or is likely to last per a period of six months or more that restricts a person’s everyday activities. This includes:

  • Loss of sight (excluding correction by glasses or contacts);
  • Severe loss of hearing;
  • Speech difficulties;
  • Chronic or recurrent pain causing restriction;
  • Breathing difficulties causing restriction;
  • Blackouts, fits or loss of consciousness;
  • Learning or comprehension difficulties;
  • Incomplete use of feet, legs, arms or fingers;
  • Emotional conditions causing restrictions;
  • Disfigurements or deformity;
  • Mental illness or condition requiring help or supervision;
  • Long-term effects of head injury, stroke or other brain damage causing restriction;
  • Any other long-term condition resulting in a restriction.

Does aged care count as a medical expense?

Residential aged care expenses for in-home care must be made to an approved care provider for personal or nursing care or accommodation for an approved care recipient. An approved care recipient is a person who has been assessed by an aged care assessment team (ACAT) as eligible for residential aged or in-home aged care.

What evidence do I need for my medical expenses tax claim?

To be able to complete your tax claim and claim tax back for your medical expenses, you should keep a meticulous record of expenses incurred throughout the financial year. Include the details of medical expenses you wish to claim tax back for. Include details of any refunds received or entitlements from Medicare, National Disability Insurance Scheme (NDIS) or private health insurance.

Make it easy with Online Tax Return

The team at Online Tax Return are dedicated to making your tax claims simple and easy. Our registered tax agents are experienced and ready to ensure you claim your entitlements correctly this financial year.

So, do you need help claiming your medical expenses in your tax return? Contact us today!

This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice.