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.