Making the most of the medical expense rebate
It is worth remembering there is a tax credit available to be claimed on your tax return in respect of net medical expenses paid during a financial year.
Known as the medical expense rebate, the rebate provides a 20% tax credit for net medical expenses that exceed $1,500.
The medical expenses can be taken up for the whole family and claimed through one person’s tax return. The rebate would be calculated as follows:
- Calculate the total of eligible medical expenses
- Less the amount reimbursed by Medicare
- Less the amount reimbursed by a private health insurance fund
- Less first $1,500 of this net medical cost (not entitled to the rebate)
- 20% of the remaining medical costs will be reflected as the tax credit.
So what medical expenses can be taken up under this rebate?
Generally, the medical expense rebate is based on the provision of medical services performed by licenced medical practitioners. As a guide, medical expenses can include:
- to dentists, orthodontists or registered dental mechanics
- to opticians or optometrists, including for the cost of prescription spectacles or contact lenses
- costs of hospital stays and services.
- for therapeutic treatment under the direction of a doctor
- for medical aids prescribed by a doctor
- prescriptions through a chemist
- 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.
Where the medical procedure is considered to be cosmetic, such costs may or may not be included in the total of medical expenses, and would need to be considered in light of the nature of the expense.
It is also worth noting that you can request Medicare and your private health fund provide you with an annual statement of all the medical services claimed through them and the amount refunded to you and your family during that year. You can even request your chemist provide you with a report of the prescriptions issued and paid during the year.
Tags: tax credits