Medical expenses: tax offset - payments for attendant assisting in employment duties

Does remuneration paid, by a taxpayer who is permanently confined to a wheelchair and who is employed in a capacity principally for their intellectual exertions, for the services of an attendant who assists the taxpayer by carrying out the incidental physical tasks as required by the taxpayer's employment qualify as medical expenses pursuant to paragraph (h) of the definition of that term in subsection 159P(4) of the Income Tax Assessment Act 1936 (ITAA 1936) for the purposes of a medical expenses tax offset?

Yes. Remuneration paid, by a taxpayer who is permanently confined to a wheelchair and who is employed in a capacity principally for their intellectual exertions, for the services of an attendant who assists the taxpayer by carrying out the incidental physical tasks as required by the taxpayer's employment does qualify as medical expenses pursuant to paragraph (h) of the definition of that term in subsection 159P(4) of the ITAA 1936 for the purposes of a medical expenses tax offset.

The taxpayer is permanently confined to a motorised wheelchair.

The taxpayer is employed in a capacity principally for their intellectual exertions but has limited ability to perform the incidental physical tasks pertaining to that employment.

The taxpayer employs an attendant to assist in addressing their disability. The attendant performs the incidental physical tasks as required by the taxpayer's employment without contributing to the taxpayer's intellectual outputs for the taxpayer's employer.

Section 159P of the ITAA 1936 allows a tax offset for certain net 'medical expenses' that a taxpayer may pay during an income year.

Paragraph (h) of the definition of the term 'medical expenses' in subsection 159P(4) of the ITAA 1936 describes medical expenses 'as remuneration of a person for services rendered by him as an attendant of a person who is blind or permanently confined to a bed or an invalid chair'.

The term 'attendant' is not defined in the ITAA 1936 or the Income Tax Assessment Act 1997 (ITAA 1997). Accordingly, it will have its ordinary meaning, having regard to the purpose and context of the provisions in which it appears: Chaudhri v. Federal Commissioner of Taxation 2001 [2001] FCA 554; ATC 4214; (2001) 47 ATR 126. The Macquarie Dictionary , 2005, 4th edition, The Macquarie Library Pty Ltd., (NSW), relevantly defines an attendant as '...someone who provides personal support and physical assistance for a person with a physical disability'.

Subparagraphs (a) to (i) of the definition of medical expense in subsection 159P(4) of the ITAA 1936 specify medical expenses which aid, address, treat or overcome an illness, medical condition or disability. In this context, the meaning of 'attendant' in subparagraph (h) of the definition of medical expenses is a person who supports and assists the person who is blind or permanently confined to a bed or an invalid chair while they perform functions that they can with that care or assistance. The phrase 'as an attendant' in subparagraph (h) defines the relevant services as those necessitated by or founded in the disability: that is, not just services rendered to the person with a disability but services rendered to the person because they are disabled.

Therefore to satisfy subparagraph (h) of definition of medical expenses in subsection 159P(4) of the ITAA 1936, the relevant services taken into account in paying remuneration must be: (a) performed by a person who supports and assists the person with a disability with the performance of functions that the person with disability can do with that support and assistance; and (b) necessitated by the disability of the person.

In this case, the attendant supports and assists the taxpayer to undertake their role as an employee engaged in a capacity principally for their intellectual exertions. The taxpayer is solely responsible for rendering the intellectual outputs required by the employer. The attendant supports and assists the taxpayer by carrying out the incidental physical requirements of the taxpayer's employment. The services rendered by the taxpayer's attendant are necessitated by the taxpayer's disability and not by the duties of the taxpayer's employment.

Accordingly, payment of remuneration to the attendant for services necessitated by the taxpayer's disability which are rendered as the taxpayer carries out their employment duties qualify as medical expenses pursuant to paragraph(h) of the definition of that term in subsection 159P(4) of the ITAA 1936.