Use it or lose it!
Did you know that the medical tax offset will be phased out by 2019?
As part of the 2013-14 Budget, the government announced that it will phase out the net medical expense offset (NMETO) with a “use it or lose it” policy.
This will mean if you do not claim the NMETO in your 2012-13 tax return, you will not be eligible for the offset in any future year, except for eligible out-of-pocket expenses relating to disability aids, attendant care or aged care expenses which will be available until 1 July 2019.
If you received the NMETO in your 2012-13 tax return, you will be eligible to receive the offset for all eligible out-of-pocket medical expenses in your 2013-14 tax return. Similarly, those who receive the tax offset in their 2013-14 tax return will be eligible for the final year of the offset in 2014-15.
Note- the financial year you do not claim the NMETO leading up to 30 June 2015, will mean you cease to be eligible for future year claims. However, you can still claim the offset for eligible expenses relating to disability aids, attendant care or aged care expenses until 1 July 2019.
For further information on the net medical tax offset thresholds and eligible out of pocket expenses applicable click here.
See the flow chart below for a further explanation of these transitional rules.
From 1 July 2012 the NMETO will be means tested.
Under the new means test, singles with an adjusted taxable income greater than $90,000 and couples with a combined taxable income greater than $180,000 in 2014-15, will see the NMETO threshold increase.
Taxpayers under the new thresholds will continue to receive a 20% rebate on expenses over $2162 (for 2014-15), and those with a higher income will be limited to a 10% claim on expenses over $5100.
Ask Us Tax can assess your eligibility to receive the net medical tax offset. Contact our office here for more information.