Beaconsfield (03) 9707 0555
Cranbourne (03) 5995 2700
Pakenham (03) 5940 4555
Warragul (03) 5622 1793
Net medical expenses tax offset is phasing out – July 2014
Draft legislation was introduced in the 2013 budget to phase out the net medical expense tax offset (NMETO), which has finally been passed into law. It means that the offset will disappear by the end of the 2018-19 income year, with some interim transitional arrangements put in place between now and July 1, 2019.
Part of the transitional regime includes that only those who claimed NMETO in 2012-13 will be eligible to claim the offset in the 2013-14 income year. Similarly, only those who claimed the NMETO in 2013-14 will be able to claim it in the 2014-15 income year.
All other taxpayers (those who made no previous claims) will be restricted to out-of-pocket expenses exceeding the relevant thresholds for specific expenses, including disability aids, attendant care or aged care only (more details on this to follow).
The NMETO for the 2012-13 income year allowed an offset of 20% of net medical expenses that are over $2,120 for:
For taxpayers with income over these thresholds in the 2013 income year, the offset is 10% of net medical expenses over $5,000. (*Note: The term adjusted taxable income includes the taxpayer’s taxable income plus other specific amounts, such as reportable fringe benefits and certain investment losses.)
The phase out of the NMETO will occur through two sets of transitional arrangements, as follows:
o the current definition and eligibility requirements, and
o relate to disability aids, attendant care or aged care.
Note: Under the ‘Category A’ rules, the terms ‘disability aids’, ‘attendant care’ and ‘aged care’ are specifically defined under the amendments. Ask this office for examples of such expenditure as contained in the explanatory memorandum to the bill which was enacted.
DISCLAIMER:All information provided in this publication is of a general nature only and is not personal financial or investment advice. It does not take into account your particular objectives and circumstances. No person should act on the basis of this information without first obtaining and following the advice of a suitably qualified professional advisor. To the fullest extent permitted by law, no person involved in producing, distributing or providing the information in this publication (including Taxpayers Australia Incorporated, each of its directors, councilors, employees and contractors and the editors or authors of the information) will be liable in any way for any loss or damage suffered by any person through the use of or access to this information. The Copyright is owned exclusively by Taxpayers Australia Inc (ABN 96 075 950 284).