Medical Expenses Tax Offset

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.

From 2015-16 (until 2018-19), transitional arrangements only allow claims for disability aids, attendant care or aged care expenses.

otherwise, for the full range of medical expensesNmeto-phase-out

  • A claim could only be made in 2013-14 if a rebate had been received in 2012-13
  • A claim could be made in 2014-15 if a rebate had been received in 2013-14

“received” means that a rebate amount greater than nil had been included in the tax assessment. Sec 159P(1C)

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

NMETO Claim Calculation

The medical expenses tax rebate is calculated as follows:

[su_box title=”2017-18″ box_color=”#a8354d” radius=”7″]

[su_label type=”default”]2017-18[/su_label]

  • 20% of eligible expenses only* above the threshold of $2,333
  • except for higher income earners for whom the offset is 10% of net medical expenses above a claim threshold of $5,504

Eligible expenditure from 2015-16 onwards is restricted to disability aids, attendant care or aged care.  For more complete information in this regard, go here. [/su_box]

[su_box title=”2016-17″ box_color=”#ff6652″ radius=”7″]

[su_label type=”default”]2016-17[/su_label]

  • 20% of eligible expenses only* above the threshold of $2,299
  • except for higher income earners for whom the offset is 10% of net medical expenses above a claim threshold of $5,423

Eligible expenditure from 2015-16 onwards is restricted to disability aids, attendant care or aged care.  For more complete information in this regard, go here. [/su_box]

[su_box title=”2015-16″ box_color=”#146abf” radius=”7″]

[su_label type=”success”]2015-16[/su_label]

  • 20% of eligible expenses only* above the threshold of $2,265
  • except for higher income earners for whom the offset is 10% of net medical expenses above a claim threshold of $5,343

Eligible expenditure from 2015-16 onwards is restricted to disability aids, attendant care or aged care.  For more complete information in this regard, go here. [/su_box]

[su_box title=”2014-15″ box_color=”#146abf” radius=”7″]

[su_label type=”default”]2014-15[/su_label]

  • 20% of net medical expenses above the threshold of $2,218
  • except for higher income earners for whom the offset is 10% of net medical expenses above a claim threshold of $5,233[/su_box]

[su_box title=”2013-14″ box_color=”#146abf” radius=”7″]

[su_label type=”info”]2013-14[/su_label]

  • 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[/su_box]

[su_box title=”2012-13″ box_color=”#146abf” radius=”7″]

[su_label type=”important”]2012-13[/su_label] 

  • 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

[/su_box]
[su_box title=”2011-12 and earlier” box_color=”#146abf” radius=”7″][su_label]2011-12 and before[/su_label] 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

[/su_box]

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.
  • See 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

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)
 
2017-18$2,333$5,504
2016-17 $2,299  $5,423
2015-16 $2,265  $5,343
2014-15 $2,218  $5,233
 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: 31 March determination date

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, 2015-16, 2016-17, 2017-182013-142012-13
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

 

[su_label type=”default”]Change to Adjusted Taxable Income Formula[/su_label]

The government has adjusted the formula for the inclusion of the value of fringe benefits in Adjusted Taxable Income.

The meaning of ‘adjusted fringe benefits total’ is modified so that the gross value rather than adjusted net value (previously 51%) of reportable fringe benefits is used, except for PBIs, hospitals and charities.

‘adjusted fringe benefits total’ is a component of Adjusted Taxable Income

This affects eligibility for:
family tax benefits, stillborn baby payment,child care benefit, Youth Allowance, Abstudy and Isolated Children’s Allowance
parental leave pay and dad and partner pay
net medical expenses offset
dependant (invalid and carer) (DICTO) tax offset
Notional dependent’s offset for the Zone & overseas personnel tax offsets

For details of the amending legislation see Budget Savings (Omnibus) Act 2016 (Schedule 15). The measures received royal assent on 16 September 2016 and according to its terms therefore take effect from 1 January 2017 for family assistance payments and for income tax tests from 1 July 2017.

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

– (2018) Medical Expenses

– (2017) Medical Expenses

– (2016) Medical Expenses

– (2015) Medical Expenses

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

See also

.

This page was last modified 2018-06-27