Net Medical Expenses Tax Offset | Phased Out
Written on the 29 May 2013 by G. Dean McKinnon
In the recent Federal Budget, the government has proposed to phase out the Net Medical Tax Offset, to commence 1 July 2013.
The Net Medical Tax Offset reduces your Tax Payable.
Net Medical Expenses are medical expenses incurred by you and your family, after deducting any refunds (e.g. Private Health Insurance claim payments, Medicare claim payments, etc.).
The Tax Offset amount is 20% of all medical expenses incurred by your family (above the Threshold - $2,120 for the 2013 Financial Year).
For example: in the 2013 Financial Year, if you paid a total of $5,000 in Medical Expenses, and received $1,500 refunds from your Private Health Insurer and Medicare, your Net Medical Expenses would be $3,500. After deducting the 2013 Financial Year Threshold of $2,120, your Tax Offset would be $276 ($3,500 - $2,120 x 20%).
The Tax Offset is not a Tax Deduction, it reduces your Tax Payable, and is (or was) a worthwhile means of reducing your tax.
The proposed phase out structure is as follows:
There are other parameters that determine if you are eligible to claim the Tax Offset (e.g. your Gross Income), therefore it is recommended you obtain taxation advice from your accountant or tax agent, to determine if you are eligible, before submitting your Tax Return.
Author: G. Dean McKinnon