Net Medical Expenses Tax Offset Changes for 2014

The Government has introduced legislation changing eligibility for the net medical expenses tax offset; restricting who can claim and what medical expenses can be claimed.

The changes involve two principle modifications and relate to the eventual phase out to this tax offset in 2019:
  1. increase to the threshold (subject to income tests - see table below) from $2060 and $5000 to $2162 and $5100 - ie. only net medical expenses in excess of the thresholds may be eligible for the tax offset
  2. transitional rules relating to the phase out of the tax offset (see below).
Note also - that income tests/caps similar to 2013 will also apply in 2014 and the rebate percentages relating to the the three tier income thresholds reduced on 1 April 2014 resulting in a modified annual percentage of the rebate entitlement.

Transitional Rule

To be eligible to claim the Net Medical Expenses Tax Offset you must have either:
  • received this offset in your 2012-1–13 income tax assessment; or
  • incurred/paid for medical expenses relating to disability aids, attendant care or aged care.
If you received this offset in your 2012–13 income tax assessment, there is no change to the types of net medical expenses that you can claim.

If you did not receive this offset in your 2012-–13 income tax assessment you can only claim net medical expenses relating to:
  • disability aids, 
  • attendant care or 
  • aged care.


Disability aids -  are items of property manufactured as, or generally recognised to be, an aid to the functional capacity of a person with a disability but, generally, will not include ordinary household or commercial appliances.

Attendant care expenses - relate to services and care provided to a person with a disability to assist with every day living, such as the provision of personal assistance, home nursing, home maintenance, and domestic services.

Aged care expenses - relate to 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 1997Aged 

Net medical expenses are your total medical expenses less refunds from Medicare and private health insurers which you, or someone else, received or are entitled to receive.

These are significant changes to the net medical expenses tax offset and will result in lower refunds for many clients.

Income thresholds and related CAPS:

Income Thresholds
Family status

ATI threshold

What can I claim?
(single at 30 June 2014 and no dependent children)
$88,000 or less
20% of net medical expenses over $2,162
above $88,000
10% of net medical expenses over $5,100
(with a spouse at 30 June 2014, or
dependent children at any time during the year, or both)
$176,000* or less
20% of net medical expenses over $2,162
above $176,000*
10% of net medical expenses over $5,100

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Copyright 2014. My Tax Zone.