Claiming Medical Expenses - Tax Offset

Net medical expenses are the medical expenses you have paid less any refunds you got, or could get, from Medicare or a private health insurer - ie. your out of pocket expenses.

You can claim a tax offset of 20% – 20 cents in the dollar – of your net medical expenses over $1,500. There is no upper limit on the amount you can claim. You can only claim medical expenses for those of your dependants who are Australian residents for tax purposes.


Who is covered in the Net Medical Expenses Tax Offset:

  • 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 – whom you maintained and whose separate net income (SNI) 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 SNI 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.

You and your dependants must be Australian residents for tax purposes but you can claim medical expenses paid while travelling overseas. You may also be able to include the medical expenses of certain dependants who are waiting to migrate to Australia.


Medical expenses covered by the Net Medical Expenses Tax Offset:

You can claim expenses relating to an illness or operation paid to legally qualified doctors, nurses or chemists and public or private hospitals. However, expenses for some cosmetic operations are excluded. (to find out which operations and dental services and treatment are cosmetic and whether you can claim your payments for them, see the ATO link Changes to net medical expenses tax offset - cosmetic surgery).

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

  • 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.
  • for nursing home fees (eg - for aged care)

Nursing home expenses are often neglected or missed in claiming the Net Medical Expenses Tax Offset. Although it is uncommon for pensioners to need to claim this offset (ie many are non-taxable), I have used this offset to reduce tax liability for pensioners on several occasions. If you or a friend/relative falls in this circumstance and you believe you have missed this claim, returns can be amended up to two years after the assessment was issued.

By David Maynard

My Tax Zone

Copyright 2014. My Tax Zone.