Medical Expenses Tax Offset (NMETO)

The Net Medical Expenses Offset is being phased out over the period from 1 July 2013 to 30 June 2018.

Transitional arrangements allow claims for disability aids, attendant care or aged care expenses to be made until 30 June 2019.

otherwiseNmeto-phase-out

  • A claim can be made in 2013-14 only if a claim was made in 2012-13
  • A (final) claim can be made in 2014-15 only if a claim was made in 2013-14

Indexation of the claim thresholds is adjusted after 31 March each year.

NMETO Claim Calculation

The medical expenses tax rebate is calculated..

2013-14

2013-14

  • 20% of net medical expenses above the threshold of $2,162
  • except for higher income earners for whom the offset is 10% of net medical expenses above a claim threshold of $5,100
2012-13

2012-13 

  • 20% of net medical expenses above the threshold of $2,120
  • except for higher income earners for whom the offset is 10% of net medical expenses above a claim threshold of $5,000
2011-12 and earlier
2011-12 and before 20% of net medical expenses above the respective thresholds

 Year ending
30 June
Threshold
2012 $2,060
2011 $2,000
2005 to 2010 $1,500

Residence requirement

The offset claim is reserved for resident taxpayers, including a current spouse and (broadly) dependants (see below).

Eligible medical expenses – what’s included

What qualifies as medical expenses is legally defined, but quite wide-ranging. In general it is restricted to payments to legally registered practitioners, for an illness or operation or for medical conditions.

  • This includes payments to or for doctors, nurses, chemists, dentists and public and private hospitals. It excludes cosmetic procedures which Medicare doesn’t support, and claims cannot include expense amounts reimbursed under Medicare or health insurance cover.
  • Click here for Allowable medical expenses

Medical Expenses – Who For?

The medical expenses you can claim are limited to yourself and your spouse, and certain dependent relatives subject to qualifying conditions:

  • children under 21 years or student children under 25 years
  • child housekeeper
  • invalid relatives

=> See Claimable Family Medical Expenses

Offset is not refundable

Medical Expense Offsets are not refundable if the amount of the offset is greater than your tax payable.

Medical Expenses Tax Offset rates and Thresholds

 Net Medical Expenses Thresholds  
 Tax Year(s)  Threshold
(20% offset rate)
Means Tested Threshold
(10% offset rate)
 
 2013-14   $2,162   $5,100
 2012-13   $2,120   $5,000
 2011-12   $2,060
 2010-11   $2,000
 2005-2010   $1,500

Indexation rules

Higher Income Earners – From 1 July 2012 income-tested

From 1 July 2012 the rebate is subject to an income test which is based on the Medicare levy surcharge income minimum thresholds. Higher income earners have a reduced offset rate of 10% and a higher minimum expenses threshold (over $5,000).

The income test is based on Adjusted Taxable Incomes with respect to the Medicare levy surcharge higher income thresholds.

  • Adjusted Taxable Income” is your declared taxable income with certain fringe benefits, exempt income and losses added back – see ATI
 ‘Higher Income’ Thresholds
2014-15 2013-14 2012-13
Single $90,000 $88,000 $84,000
Family $180,000 $176,000 $168,000
For families, thresholds increase by $1,500 for each child after the first.
Family threshold applies if with a spouse at 30 June, or dependent children at any time during the year

 

Medical Expense Offset claim calculation

Subject to entitlement, the procedure for working out a Medical Expense Offset claim is as follows:

  1. Determine eligible expenditures paid within the tax year
  2. Ensure all reimbursements are deducted
  3. Deduct your minimum threshold amount for that tax year – determined by income
  4. Multiply the result by 20% (or 10% in 2012-13 and later years depending on income)
  5. The result is your Medical Expenses Tax Offset which is deducted from your tax payable, with any unused amount not refundable.
Further information

See ATO Guide to tax offsets – Medical Expenses

Indexation provision – ATO – CPI – ITAA 1936 Sec 159P

See also

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This page was last modified on 28 July 2014