Importd sperm and Medicare tax offset questions

[Indadhanu]

No idea how this works so bear with me...

If your net medical expenses are over the Australian Tax Office’s (ATO) threshold, you can claim an offset of 20 per cent (20 cents in the dollar) in your tax return.

To claim the medical expenses tax offset in your tax return, you need to know the total amount of medical expenses you incurred for yourself and your dependants. You then deduct any refunds from Medicare Australia, your private health fund or any other reimbursements that relate to those expenses receiving during the financial year.

So... I assume it means out of pocket expenses can be claimed?
Ok, so can we claim the sperm we've imported? We've paid $1060 per month just for sperm, and we can't get any of that back through Medicare right now, but our clinic said they think you can claim it at the end of the financial year, as well as the registration fee for the clinic etc. Does anyone know anythign about this?

Also, my partner is the one having the treatment, but because we are registered under the Family Safety Net (whatever it's called lol) I can claim expenses off my income right? Seems silly to do it the other way around since my partner won't be paying tax so it won't actually offset anything! So I can claim on behalf of us against on my tax return?

[~me~]

What you are describing is once you hit $1500 of out of pocket medical expenses, you can get 20 cents in the dollar. It doesn't make any difference if Medicare or PHI have paid a portion, it's any out of pocket health expenses.
At the end of financial year, request Tax statement of benefits from your PHI and also Medicare and they will have any claims you have put in and show your out of pocket expenses and the amount they contributed.
So keep every receipt, especially the ones for the sperm as you probably can't claim any of that?, inlcuding Pharmacy scripts, again you can go to your Pharmacy and request a Tax statement of your or partner.
Last year I think they were claimed against my DH?
The ATO website has a very detailed summary of what you can claim. We always have our Tax done by and agent (DH's brother), he works out who it is best offset against usually.

HTH

ETA: I just googled ATO medical expenses and it brought up exacty what you need in the first search item.

[Indadhanu]

Imported sperm isn't mentioned anywhere on the ATO site, so I'm not sure if it is ok or not, especially since it doesn't have a benefit number on Medicare ...?


Has anyone who has ever actually used imported sperm know whether or not you can claim it at the end of the financial year?

ETA: All the ATO says is...

Medical expenses include payments:

* to dentists, orthodontists or registered dental mechanics
* to opticians or optometrists, including for the cost of prescription spectacles or contact lenses
* to a carer who looks after a person who is blind or permanently confined to a bed or wheelchair
* for therapeutic treatment under the direction of a doctor
* for medical aids prescribed by a doctor
* for artificial limbs or eyes and hearing aids
* for maintaining a properly trained dog for guiding or assisting people with a disability (but not for social therapy)
* for laser eye surgery, and
* for treatment under an in-vitro fertilisation program.

Expenses which do not qualify as medical expenses include payments made for:

* cosmetic operations for which a Medicare benefit is not payable
* dental services or treatments that are solely cosmetic
* therapeutic treatment where the patient is not formally referred by a doctor – a mere suggestion or recommendation by a doctor to the patient is not enough for the treatment to qualify; the patient must be referred to a particular person for specific treatment
* chemist-type items, such as tablets for pain relief, purchased in retail outlets or health food stores
* inoculations for overseas travel
* non-prescribed vitamins or health foods
* travel or accommodation expenses associated with medical treatment
* contributions to a private health insurer
* purchases from a chemist that are not related to an illness or operation
* life insurance medical examinations
* ambulance charges and subscriptions, and
* funeral expenses.

[butterfly_warrior]

My tax agent feels that it is appropriate to claim our embryo storage fees under medical expenses, so I can't see why the costs of importing sperm can't be claimed. I'm not sure that there is an actual list of what counts and what doesn't, would it be worth a call to the ATO?

[Indadhanu]

THanks BW Does embryo storage have a Medicare Benefit number?

[~me~]

Alot of things that are claimable won't have a benefit number from Medicare or your PHI, the description should be enough to put it with your Health expenses. You could also see if the IVF clinic would be willing to write a statement saying the sperm was used for an IVF procedure.

ETA: Look up MBS online for item 13218 and see if this fits the description.

[Indadhanu]

Oh, thats a good idea! Being able to claim it as an offset would really make a huge difference at the end of the financial year. Expensive stuff that it is!

[butterfly_warrior]

embryo storage isn't claimable through medicare - no numbers at all. Also not claimable through PHI.

BW

[Muttley27]

Hello,

1st time post....

My partner and I just purchased our first amp of US Sperm, i am confused about the claiming aspect. Can you claim it on Medicare or is it a tax thing... how does it all work.

Thanks for your help in advance

Annemarie

[buliej]

Costs associate with donor eggs and donor sperm are treated the same by the ATO. Thus rulings which mention one apply to the other. Here's what our tax account found -

ATO ID 2001/669 - Medical expenses tax offset - purchase of donor sperm from overseas

Also further - from ATO (she sent us this - I can't find it myself):

1011286371630


Edited version of private ruling

Authorisation Number: 1011286371630

This edited version of your ruling will be published in the public Register of private binding rulings after 28 days from the issue date of the ruling. The attached private rulings fact sheet has more information.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. Contact us at the address given in the fact sheet if you have any concerns.

Ruling

1. Are you entitled to a tax deduction for the costs associated with IVF, egg and sperm donation?

No.

2. Are you entitled to a medical expenses tax offset for the costs associated with IVF, egg and sperm donation?

Yes.

3. Are you entitled to a medical expenses tax offset for the costs associated with legal fees, agency fees and donor insurance?

No.

Relevant Facts:

You enlisted the services of an overseas IVF agency.

You were responsible for paying all costs incurred, including medical, travel of the donors, legal and agency fees for the egg and sperm donation.

You incurred the following costs:

· Agency fee to search for a egg donor

· Set up fee for depositing money

· Monitoring services for the egg donor

· Psychological screening for egg donor

· Medical screening for donor

· Psychological screening for yourself

· Monitoring services for another donor

· Lab screening for donor

· Medication for donor and yourself

· Attorney fees for yourself and donor

· Sperm donor fees

· Donor insurance

· Genetic evaluation.

Reasons for decision

Summary:

You are not entitled to a tax deduction for the costs associated with IVF treatment.

However, you are entitled to a medical expenses tax offset for your medical treatment expenses in relation to IVF.

You are not entitled to a medical expenses tax offset for your expenses in relation to donor insurance, legal expenses and agency fees.

Detailed reasoning:

Deductibility of services provided by fertility clinic and associated expenses

Section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) allows a deduction for all losses and outgoings to the extent to which they are incurred in gaining or producing assessable income except where the outgoings are of a capital, private or domestic nature, or relate to the earning of exempt income.

In your situation, you have sought the services of a fertility clinic and incurred expenses related to egg and sperm donation, IVF process as well as travel, legal and agencies expenses.

These expenses have no direct connection to the gaining or producing assessable income and as such are considered to be expenses of a private nature. Accordingly, you are not eligible for a deduction under section 8-1 of the ITAA 1997.

Although you are not entitled to a work related deduction for fertility clinic services and associated expenses incurred, you may be eligible for the medical expenses tax offset for specific expenses.

Medical expenses tax offset

A medical expense tax offset is available where the taxpayer, who is an Australian resident, pays medical expenses in an income year for themself or a dependant who is also an Australian resident. The medical expense tax offset is only available if the amount of medical expenses, reduced by any entitlement to reimbursement from a health fund or government authority (the rebatable amount) exceeds $1,500.

The tax offset is 20% of the amount by which the rebatable amount exceeds $1,500.

The term medical expenses is defined for the purposes of the medical expenses tax offset to cover payments to doctors, nurses, chemists, dentists, opticians and optometrists. It also covers payments for such expenses as therapeutic treatment, medical or surgical appliances.

Medical expenses

Medical expenses are defined in paragraph 159P(4)(a) of the Income Tax Assessment Act 1936 (ITAA 1936) to include payments to a legally qualified medical practitioner, nurse or chemist, or a public or private hospital in respect of an illness or operation.

Taxation Ruling IT 2359 states that infertility is an illness within the ordinary meaning of the term and payments to a legally qualified medical practitioner or hospital for treatment under an IVF program qualify as medical expenses.

In your case, you incurred expenses related to egg and sperm donation as part of your IVF treatment. Although some of the medical expenses were made on behalf of a person other than yourself or your dependant, this does not preclude the expenses from qualifying for the medical expenses tax offset. The cost of obtaining the donor eggs and sperm as part of IVF is considered to be a cost of the treatment to overcome infertility.

Therefore, you are entitled to the medical expenses tax offset for the following medical expenses under subsection 159P(1) of the ITAA 1936:

· Monitoring services for the egg donor

· Psychological screening for egg donor

· Medical screening for donor

· Psychological screening for yourself

· Monitoring services for another donor

· Lab screening for donor

· Medication for donor and yourself

· Sperm donor fees

· Genetic evaluation.

Donor Insurance, Legal Expenses & Agency Fees

Subsection 159P(4) of the ITAA 1936 specifically defines medical expenses which are eligible for the medical expenses tax offset. The definition does not include the costs of legal or agency services to obtain medical treatment. This was confirmed by the decision of the Administrative Appeals Tribunal in Case R12 84 ATC 165; 27 CTBR (NS) Case 63. In that case, travelling whilst necessary in order to receive medical treatment, were held not to be a payment for the medical treatment.

Accordingly, legal and agency expenses incurred in order to obtain medical treatment are not medical expenses as defined in subsection 159P(4) of the ITAA 1936 and you will not be entitled to a medical expenses tax offset. This includes the following expenses:

· Agency fee to search for a egg donor

· Set up fee for depositing money

· Attorney fees for yourself and donor

· Donor insurance.

Disclaimer

You cannot rely on the rulings in the Register of private binding rulings in your tax affairs. You can only rely on a private ruling that we have given to you (or to someone acting on your behalf).

The Register of private binding rulings is a public record of private rulings issued by the Tax Office. The Register is an historical record of rulings, and we do not update it to reflect changes in the law or our policies.

The rulings in the Register have been edited and may not contain all the factual details relevant to each decision. Do not use the Register to predict Tax Office policy or decisions.




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