Medical Expenses Tax Offset: medical and surgical appliance - speech aid

Do expenses incurred by a taxpayer for the purchase, repair and maintenance of a speech aid qualify as medical expenses for the purposes of subsection 159P(4) of the Income Tax Assessment Act 1936 (ITAA 1936)?

Yes. Expenses incurred by a taxpayer in relation to the purchase, repair and maintenance of a speech aid qualify as medical expenses for the purposes of subsection 159P(4) of the ITAA 1936.

The taxpayer is a resident of Australia.

The taxpayer underwent an operation as a result of which they became completely mute.

The taxpayer incurred expenses in acquiring a speech aid, repairing it, and purchasing batteries and spare parts.

The speech aid was prescribed by a legally qualified medical practitioner.

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 $1,500.

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

The Commissioner's view on what constitutes a 'medical or surgical appliance' is set out in Taxation Ruling TR 93/34.

Paragraph 3 of TR 93/34 states that a 'medical or surgical appliance' is: ...an instrument, apparatus or device which is: (a) manufactured as; or (b) distributed as; or (c) generally recognised to be an aid to the function or capacity of a person with a disability or illness.

Paragraph 17 of TR 93/34 states that 'function or capacity includes the ability to perform activities of daily living.'

The speech aid is an instrument, apparatus or device manufactured, distributed and generally recognised to be an aid to the taxpayer's ability to perform an activity of daily living, that is, the activity of speaking.

As such, the speech aid is a medical or surgical appliance. As the speech aid has been prescribed by a legally qualified medical practitioner its purchase is a medical expense for the purposes of subsection 159P(4) of the ITAA 1936.

Expenses incurred in repairing the speech aid, and purchasing batteries and spare parts are considered to have been paid 'in respect of' a medical or surgical appliance prescribed by a legally qualified medical practitioner and, therefore, are also medical expenses for the purposes of subsection 159P(4) of the ITAA 1936 ( Case F25 74 ATC 130; (1974) 19 CTBR (NS) Case 43 ).

Therefore, the expenses incurred by the taxpayer in relation to the purchase, repair and maintenance of the speech aid qualify as medical expenses for the purposes of subsection 159P(4) of the ITAA 1936.