Medical Expense Tax Offset - hair transplant operation

Is a taxpayer entitled to claim a medical expense tax offset under section 159P of the Income Tax Assessment Act 1936 (ITAA 1936) for expenses paid for a hair transplant operation performed on their spouse?

Yes. The taxpayer is entitled to claim a medical expense offset under section 159P of the ITAA 1936 for expenses incurred on a hair transplant operation performed on their spouse, as the expense is considered to be an eligible medical expense.

The taxpayer and spouse are residents of Australia.

The taxpayer's spouse had a hair transplant. A legally qualified doctor performed the surgery. The cost of the surgery exceeded $1250.

The medical expenses have not been reimbursed, nor are they eligible to be reimbursed, from a government or public authority or a society, association or fund.

A medical expense tax offset is available to a taxpayer under section 159P of the ITAA 1936, where the taxpayer incurs medical expenses for themselves or a dependant who is an Australian resident. The medical expense tax offset is only available if the amount of medical expenses (reduced by any entitlement to reimbursement from a health fund or government authority) exceeds $1250. The tax offset is 20% of the amount by which the net medical expenses exceeds $1250.

Subsection 159P(4) of the ITAA 1936 defines dependant to mean: • the spouse of the taxpayer; • a child of the taxpayer less than 21 years of age; • a person in respect of whom the taxpayer is entitled to a tax offset under section 159J; or • a student or child less than 16 years of age who is not a student whom the taxpayer is entitled to a notional tax offset under section 159J.

Subsection 159P(4) defines 'medical expenses' to include payments to a legally qualified medical practitioner, or a public or private hospital, in respect of an illness or operation.

Taxation Determination TD 94/5 states that where cosmetic surgery is performed by a legally qualified medical practitioner, it falls within the meaning of 'operation' for medical expense purposes.

The taxpayer's spouse has had hair transplant surgery performed by a legally qualified medical practitioner. The surgery constitutes an operation for the purposes of a medical expense. As the net medical expenses exceeded $1250, the taxpayer is entitled to a medical expense tax offset under section 159P of the ITAA 1936.