Understanding deductions, knowing what you are eligible for and what you can claim be tricky if you’re not trained in tax. On top of this, the rules around ‘out-of-pocket‘ medical expenses have changed recently. I’ve called in The Wealth Guy, Joshua Stega to shed some light on the issue.
Over to you Josh!
The net medical expenses offset was originally designed to provide assistance, in the form of a 20% tax break, to eligible taxpayers who experienced substantial out-of-pocket medical expenses during any financial year.
Unfortunately, the offset is phasing out, with new legislation meaning that the offset will no longer exist by the end of the 2018-19 financial year. Between now and 1 July 2019 there are some transition arrangements that apply and I will briefly outline them here:
Option 1
From the 2014-15 tax year until the end of 2018-19 tax year, taxpayers can only claim the Net Medical Expenses Tax Offset for medical expenses that meet both of the following requirements:
- They meet the current definition and eligibility requirements; and
- They relate to disability aids, attendant care or aged care.
Option 2
For the 2014-15 tax year, taxpayers can only claim for the full range of medical expenses (as defined by the previous rules) if they received the net medical expenses tax offset in both the 2012-13 and 2013-14 tax years. This option, will not apply next year (2015-16).
For a full list of the medical expenses that could previously be claimed and the definitions of disability aids, attendant care or aged care, I would direct you to this link on the ATO website.
