August 27, 2013

Net Medical Expenses Tax Offset Phase Out

From 1 July 2019, taxpayers will no longer be able to claim a tax offset for out-of-pocket medical expenses. All claims from 1 July 2013 will be restricted to eligible taxpayers who incur out-of-pocket medical expenses relating only to disability aids, attendant care, or aged care expenses.

It’s now even harder

Historically, eligible taxpayers could claim a Net Medical Expense Tax Offset (NMETO) for certain out-of-pocket medical expenses. This offset will be phased out completely with transitional arrangements available to those currently claiming the offset.

From 1 July 2013, only those who claimed NMETO in 2012-13 will be eligible to claim NMETO 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. These offsets will apply to all medical expenses.

In addition, the claim for all other taxpayers (ie those who did not claim the NMETO in 2012-13) will be restricted to out-of-pocket medical expenses for disability aids, attendant care, or aged care expenses, which exceed the relevant thresholds. There is no mention of any change to the existing thresholds ($2120 for 2012-13) or 20 percent of the expense that can be claimed.

Source: BDO Federal Budget Report 2013

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