Explanatory Memorandum
(Circulated by authority of the Treasurer, the Hon Peter Costello, MP)Chapter 1 - Medical expenses tax offset
Outline of chapter
1.1 Schedule 1 to this bill amends the ITAA 1936 to broaden the list of eligible medical expenses under the medical expenses tax offset to include payments made in maintaining a properly trained dog for guiding or assisting people with a disability.
Context of amendments
1.2 Payments for maintaining properly trained dogs for people who are blind can currently be claimed under the medical expenses tax offset.
1.3 This amendment will ensure that the same treatment is available for expenses incurred in maintaining properly trained dogs for guiding or assisting people with a disability.
Summary of new law
1.4 Under the amendment, expenses incurred in maintaining a dog for guiding or assisting a person with a disability will be qualifying medical expenses for the purposes of the medical expenses tax offset, where the Commissioner is satisfied that the dog is properly trained in the guidance or assistance of persons with disabilities.
| New law | Current law |
|---|---|
| Payments incurred in maintaining a dog for guiding or assisting a person with a disability are qualifying medical expenses under the medical expenses tax offset where the Commissioner is satisfied that the dog is properly trained in the guidance or assistance of people with disabilities. | Payments incurred in maintaining a dog for guiding a person who is blind are qualifying medical expenses under the medical expenses tax offset where the Commissioner is satisfied that the dog is properly trained by a public institution in the guidance of people who are blind. |
Detailed explanation of new law
1.5 Section 159P of the ITAA 1936 allows a tax offset at the rate of 20% of any net qualifying medical expenses (i.e. qualifying medical expenses less available reimbursements, such as Medicare and private health insurance refunds) above $1,500 in an income year. The tax offset may be claimed by a resident individual for expenses incurred in respect of himself/herself and/or resident dependants.
1.6 Subsection 159P(4) sets out those payments that qualify as medical expenses for the purposes of the medical expenses tax offset.
1.7 The law currently allows payments for the maintenance of a dog used for the guidance of a person who is blind, being a dog that the Commissioner is satisfied is properly trained by a public institution in the guidance of people who are blind. However, payments in respect of 'hearing dogs' or 'service or assistance dogs' cannot presently be claimed.
1.8 Typically, a 'hearing dog' assists a person who is deaf or hearing impaired by responding to a variety of auditory cues, such as a baby crying, a smoke alarm, an alarm clock, a door buzzer or bell or a ringing telephone. 'Assistance dogs' (or 'service dogs') typically provide assistance to people with physical disabilities by retrieving objects that are out of reach, pulling wheelchairs, opening and closing doors, turning light switches off and on or assisting ambulatory persons to walk by providing balance and counterbalance.
1.9 This bill amends subsection 159P(4) of the ITAA 1936 to broaden the list of eligible medical expenses to include payments incurred in maintaining a properly trained dog for people with disabilities. Consistent with the current provisions, the dog will need to be one that the Commissioner is satisfied is properly trained in guiding or assisting people with disabilities.
1.10 Without limiting the scope of the amendment, dogs that will typically become eligible are 'hearing dogs' and 'service or assistance dogs'. However, this bill does not allow for claims relating to 'social/therapy dogs' (or similar). A 'social/therapy dog' is typically selected or trained to provide companionship to people in nursing homes, hospitals and other institutions.
Application and transitional provisions
1.11 The amendment applies in relation to the 2002-2003 income year and later income years.