NO.047

MEDICAL EXPENSES OFFSET — EXCLUSION OF PURELY COSMETIC PROCEDURES

The Australian Government will exclude purely cosmetic procedures from the

Medical Expenses Offset (MEO), with effect from the 2005-06 income year.

The Government will amend the definition of eligible medical expenses under

the Income Tax Assessment Act 1936 to restrict access to the MEO, so

that taxpayers will no longer be able to claim this offset in relation to purely

cosmetic procedures.

The Government considers that the MEO should cater for those taxpayers with

significant medical expenses arising out of legitimate medical need.

Taxpayers claiming the MEO in respect of cosmetic procedures for legitimate

medical need, such as skin grafts or reconstructive surgery, will not be affected

by this measure.

The MEO is available to resident taxpayers at a rate of 20 per cent of any

net medical expenses above the $1,500 threshold in an income year. The MEO does

not apply to any proportion of expenses reimbursed by Medicare or health insurance

funds.

CANBERRA

10 May 2005