2013 Tax Mini Series - Medical Expenses

2013 Tax Mini Series - Medical Expenses

Getting sick may not longer be good tax planning
If you have the misfortune to have significant medical expenses during a tax year, the tax system has come to the rescue to provide you a tax offset (rebate) when you lodge your tax return.

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In 2011, you could get the benefit of this offset if your ‘out of pocket’ expenses were more than $2000. In 2012, they indexed the threshold to $2060.

Above those levels, you may have received a rebate calculated at 20% of the ‘out of pocket’ amount.

For 2013, the new threshold is $2120 … unless you are a high income earner.

For ‘high’ income earners, there are two major changes. Firstly, your threshold is set at $5000. Secondly rather than your rebate being calculated at 20% in the dollar, you will get just 10%.

To be a high income earner for these purposes, your income level will need to be:

  • for singles – $84,000;

  • for married couples (if married on the last day of the income year) – $168,000;

  • for families (ie singles or married couples who have one or more dependent children at any time of the income year) – $168,000, increased by $1,500 for every dependent child after the first.

So if you have $5500 of out of pocket medical expenses, and spend hours gong through your medical records for the year and calculate and record the $5500, you will get a rebate of just $50 from the ATO.

For many, this will simply make the rebate ‘too much work’ to get so little, and many will forfeit the rebate. Which is probably the idea.

Amazing Wealth, Long Term Investment and Tax Benefits

Amazing Wealth, Long Term Investment and Tax Benefits

2013 Tax Mini Series - Private Health Insurance Rebate

2013 Tax Mini Series - Private Health Insurance Rebate