Caulfield Accountant Details Medical Expense Tax Offset 2013


Announced on the 8th of May 2012, the government announced in the budged that for the 2012-13 financial year and onwards, the medical expense offset will now be means tested. We have described below the changes to the medical expense tax offset as well as provided 2 examples of a builder with income less than $84,000 and an accountant with a property in the eastern suburbs of Melbourne.

Clients with an adjusted taxable income of more than $84,000 for singles or $168,000 for couples will be affected. Those families with dependent children will also have a $1500 increase in their threshold per child.

For those taxpayers with income below the thresholds, you can continue to claim a 20% tax offset for medical expenses that are in excess of $2120 when you lodge your return with your accountant.

For those taxpayers with income above the thresholds, you can still claim a medical expense offset but it will be subject to new thresholds. You can claim a 10% tax offset for medical expenses that are over $5000.

What is Adjusted Taxable Income?

Your adjusted taxable income is not the same as your taxable income. Basically, adjusted taxable income includes:

  • Taxable Income
  • Fringe Benefits
  • Government Pensions that are tax free
  • Reportable superannuation contributions
  • Add back of investment losses

Less: child maintenance expenditure

Example 1: Net medical expenses of single taxpayer earning less than $84,000

In the 2012-13 year, a builder in the eastern suburbs of Melbourne had an adjusted taxable income of $70,000. He had medical expenses of $4000 for himself and his family. He is entitled to a rebate of $376 [(4000-2120)x20%].

Example 2: Net medical expenses of a single professional earning more than $84,000

In the 2012-13 year an accountant had a taxable income of $80,000. He also owned an investment property in the eastern suburbs of Melbourne with a loss of $10,000. Because his adjusted taxable income is $90,000, he will need to spend at least $5000 out of pocket before he can commence claiming a 10% offset for the amount in excess of this.

Hillyer Riches is a specialist accounting, business advisory and smsf firm located in Melbourne. We service areas in the eastern suburbs of Melbourne such as, Caulfield, Camberwell & Malvern. For more information email an accountant at or phone us on 03 9571 5333.


This article is for general information only and should not be relied upon without first seeking advice from an appropriately qualified accountant or other suitable professional.

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