Medical expenses tax offset - respite care in an aged care facility

Is the taxpayer entitled to a medical expenses tax offset under section 159P of the Income Tax Assessment Act 1936 (ITAA 1936) for the cost of fees charged for respite care in an aged care facility?

Yes. The taxpayer is entitled to a medical expenses tax offset under section 159P of the ITAA 1936 for the cost of fees charged for respite care in an aged care facility.

The taxpayer's spouse entered an aged care facility for respite care after 1 October 1997.

The aged care facility is an approved aged care provider under the Aged Care Act 1997.

The taxpayer's spouse requires respite care at level 6.

Fees paid to the aged care facility exceed $1250.

Subsection 159P(3A) of the ITAA 1936 provides that a tax offset is allowable to a taxpayer whose net medical expenses in the year of income exceed $1250.

The expenses must be paid by a resident taxpayer in respect of themselves or their resident dependant. A dependant includes the spouse of a taxpayer pursuant to subsection 159P(4) of the ITAA 1936.

Paragraph (a) of the definition of medical expenses under subsection 159P(4) of the ITAA 1936 includes payments made to a public or private hospital in respect of an illness or operation.

An aged care facility or nursing home will be regarded as a hospital for the purposes of subsection 159P(4) of the ITAA 1936 if it is approved under the Aged Care Act (Taxation Ruling IT 261).

The payment to the hospital must be in respect of an illness or operation. The payment, if made on or after 1 October 1997, will be accepted as being in respect of an illness if the taxpayer is an 'approved care recipient' under the Aged Care Act. An 'approved care recipient' is a person who has been assessed as requiring care at levels 1 to 7 (Taxation Ruling TR 93/14). Respite care, which is in the nature of occasional rather than full time care, qualifies as approved care for these purposes.

The taxpayer made payments after 1 October 1997 to an aged care facility for respite care of their spouse. The aged care facility is an approved aged care provider under the Aged Care Act. The taxpayer's spouse is an 'approved care recipient' as they require care at level 6. The payments therefore qualify as medical expenses for the purposes of calculating the medical expense tax offset under section 159P of the ITAA 1936.