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LASER EYE SURGERY – CLAIM A REBATE OF UP TO 20% FROM THE GOVERNMENT

Did you know that you may be able to get a tax rebate (offset) for up to 20% of the costs of your laser eye surgery when you lodge your Australian income tax return?

Changes announced in the May 2013 Federal Budget may affect your ability to claim Laser Eye Surgery as a tax rebate.  The May 2013 Federal Government budget announcement:  The medical expenses tax offset is being phased out.  If you were eligible to claim medical expenses in 2012/13 financial year,  you will be able to continue to claim for the 2013/14 and 2014/15 financial years.  Those not eligible to claim in 2012/2013,  will not be able to claim tax rebate for medical expenses in 2013/14, or 2014/15. We recommend you check your eligibility with your accountant.

For the 30 June 2013 tax year, people with annual incomes under $84,000 for singles and $168,000 for couples can claim a tax offset of 20% (that is, 20 cents on the dollar) of their net medical expenses over $2,120.  Changes announced by the Government in the 2012/13 Budget has reduced the rebate payable to 10% and raised the threshold to $5000 for higher income earners (annual incomes above $84,000 for singles and $168,000 for couples) .  

The following example explains the calculation: 

Medical Expense Rebate – Example

For people with annual incomes under $84,000 for singles and $168,000 for couples

Total eligible medical expenses (30 June 2013 income year)                        $9,500

Less:         Medicare benefits                                                                                  (2,000)

                  Health fund or other insurance claims                                               (1,000)

Net medical expenses amount                                                                             $6,500

($5,500 is the typical cost of bilateral LASIK at LVCCC)

Less:         Threshold (indexed annually - 30 June 2013 figure shown)       (2,120)

Excess over current threshold                                                                              $4,380

Times 20% - Your Medical Expenses Rebate                                                     $876

In this example the rebate reduces your income tax bill by $876. If the tax on your taxable income is less than $900, the excess is not refunded and does not carry forward.

For people with annual incomes above $84,000 for singles and $168,000 for couples the following will apply:

Total eligible medical expenses (30 June 2013 income year)                     $9,500

Less:         Medicare benefits                                                                                 (2,000)

                  Health fund or other insurance claims                                              (1,000)

Net medical expenses amount                                                                             $6,500

($5,500 is the typical cost of bilateral LASIK at LVCCC)

Less:         Threshold (indexed annually - 30 June 2013 figure shown)        (5,000)

Excess over current threshold                                                                               $1,500

Times 10% - Your Medical Expenses Rebate                                                      $150

In this example the rebate reduces your income tax bill by $150. If the tax on your taxable income is less than $100, the excess is not refunded and does not carry forward.

Which Medical Expenses Qualify for the Rebate?

Eligible medical expenses include payments:

  • To legally qualified doctors, nurses, chemists or hospitals in respect of an illness or operation
  • To a legally qualified dentist for dental services or artificial teeth (including work of registered dental mechanics)
  • For therapeutic treatment where the patient is referred by a doctor for treatment such as physiotherapy, massage, chiropractic and osteopathy
  • Hearing aids and artificial limbs or eyes
  • Other medical aids prescribed by a doctor
  • Eyesight testing and prescription spectacles
  • To carers for blind persons or those permanently confined to a bed or wheelchair
  • For the maintenance of guide dogs for disabled persons (other than social therapy dogs)

 What Expenses are Excluded?

Various expenses are excluded from the rebate including:

  • Cosmetic medical procedures which do not qualify for Medicare benefits
  • Dental work that is solely cosmetic
  • Chemist type products (eg aspirin) that are purchased from other retailers
  • Purchases from a chemist that do not relate to an illness or operation
  • Health insurance premiums

 What About Laser Eye Surgery?

The Federal Government accepts that laser vision correction surgery is not cosmetic. Instead it is performed for medical reasons to correct a patient’s vision and does not affect the appearance of the eye. This means it is eligible for the medical expense rebate. Laser eye surgery is also GST free.

Who can I Include in my Rebate Claim?

You can claim the rebate for medical expenses of the following Australian residents (your dependents):

  • Yourself
  • Your spouse including a de facto or same sex partner
  • Your children under age 21
  • Children under age 21 or full time students under age 25 studying at a school, college or university where you contribute to their maintenance (as defined)
  • Certain other dependents such as parents and invalid relatives (conditions apply)

 What Records Should You Keep?

To maximise your rebate claim you should keep all relevant records including:

  • Medicare records or itemised year end statements
  • Health fund statements
  • Chemist statements or receipts
  • Receipts for therapeutic services
  • Receipts for other qualifying expenditure that is not listed on summary statements

 You will need to summarise this data to prepare your income tax return claim.

Extra Information

Our advice is general and you should see your accountant or tax agent if you need more information about claiming the medical expense rebate. This summary was prepared by Matthew Lewis Chartered Accountant of UHY Haines Norton Sydney for LVCCC.

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