Medical expenses tax offset: payment for a personal alarm monitoring service

Does payment for a personal alarm monitoring service, made by the taxpayer to the service provider, qualify as a 'medical expense' for the purposes of section 159P of the Income Tax Assessment Act 1936 (ITAA 1936)?

No. The payment for a personal alarm monitoring service, made by the taxpayer to the service provider, does not qualify as a 'medical expense' for the purposes of section 159P of the ITAA 1936.

The taxpayer is suffering from a condition that may result in a medical emergency at any time.

The risk of such an emergency has brought about the need for constant monitoring and this has been arranged in the form of a personal alarm monitoring service.

The service provider is a private firm that provides the taxpayer with an emergency call button, a device worn on the person at all times.

When activated, the call button device alerts the service provider to the emergency. A representative of the service provider then takes the following action: • they attempt to contact the wearer of the device in order to determine the nature of the emergency. Upon contact, the preferred course of action is agreed upon and the representative will contact the most appropriate service/person, for example, the ambulance service. • if no contact can be made, individuals on a pre-arranged emergency contact list are contacted, for example, family and friends. • if no contact can be made with any of those individuals on the list, an ambulance is directed to attend the home of the wearer of the device.

The representative of the service provider who takes this action is not a legally qualified medical practitioner, nurse or chemist and does not make an assessment of an emergency in any such capacity - they merely relay the emergency through the appropriate channels.

A tax offset is available for the cost of net medical expenses paid by a taxpayer in respect of themselves or their dependant.

The term 'medical expenses' is defined to include payments made to a legally qualified medical practitioner, nurse or chemist, or a public or private hospital in respect of an illness or operation (subsection 159P(4) of the ITAA 1936).

Additionally, payments to the 'employer' of a legally qualified medical practitioner, nurse or chemist (where that employer is not a public or private hospital) are taken, for the purposes of the offset, to be payments made directly to that medical practitioner, nurse or chemist (subsection 159P(5) of the ITAA 1936).

The term 'medical expenses' is also defined to include payments in respect of a medical or surgical appliance prescribed by a legally qualified medical practitioner (subsection 159P(4) of the ITAA 1936).

Consideration is first given as to whether or not the payments are made to 'a legally qualified medical practitioner, nurse or chemist' or an employer of such.

In this case, the service that is being provided is that of referral - the service provider does not despatch medical or any other personnel to deal with the emergencies, it is simply responsible for relaying the details of the emergency through pre-arranged channels. The representative of the service provider who monitors and acts on the alarm is not a legally qualified medical practitioner, nurse or chemist and does not make an assessment of an emergency in any such capacity. Therefore, the payments are not made to 'a legally qualified medical practitioner, nurse or chemist' or an employer of such.

Next, consideration is given as to whether or not the private firm that provides the personal alarm monitoring service is a 'private hospital' for the purposes of subsection 159P(4) of the ITAA 1936. As the term 'hospital' is not defined for the purposes of section 159P of the ITAA 1936, reference is made to its ordinary meaning. The Macquarie Dictionary (Revised Third Edition) 2001 defines 'hospital' as: an institution in which sick or injured persons are given medical or surgical treatment.

The service provider merely monitors use of the emergency call button device and communicates the details of any emergency to the appropriate service and/or individuals. It does not render treatment of any description. Accordingly, it is not a 'private hospital' for the purposes of subsection 159P(4) of the ITAA 1936.

Having established that the payments in question are not made 'to a legally qualified medical practitioner, nurse or chemist, or a public or private hospital', it is not necessary to consider whether those payments are, in turn, 'in respect of an illness or operation'.

Finally, as the provision, installation and maintenance of an emergency call button device is part of the personal alarm monitoring service, it is necessary to consider whether or not payment for the service, or any part thereof, is in respect of a medical or surgical appliance prescribed by a legally qualified medical practitioner.

Taxation Ruling TR 93/34 describes the meaning of a 'medical or surgical appliance' as that of an instrument, apparatus or device which is manufactured, distributed or generally recognised as an aid to the function or capacity of a person with a disability or an illness.

It is clear that the emergency call button does not overcome any deficit that the taxpayer has in the way they function. Nor does it in any way restore their capacity or ability to perform the activities of daily living. It is merely a communication tool that forms an alternative to a telephone in the event of a medical emergency. The character of the appliance is not one of a medical or surgical nature and accordingly, no part of the payment for the personal alarm monitoring service qualifies as payment in respect of a medical or surgical appliance for the purpose of subsection 159P(4) of the ITAA 1936.

Accordingly, payment for the personal alarm monitoring service, made by the taxpayer to the service provider, does not qualify as a 'medical expense' for the purposes of section 159P of the ITAA 1936.