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Tax relief for parents with children suffering behavioural disorders

If you have a child with a behavioural disorder, then a little-known ATO tax incentive might be available to you. The Medical Expenses tax offset allows taxpayers to claim deductions on net medical expenses – in other words, the expenses paid out-of-pocket after Medicare and health fund refunds – and this can be applied to Applied Behaviour Analysis (ABA). The offset is being slowly phased out at the moment, but qualified taxpayers can still receive it until the 2018-19 financial year.

Who is eligible to receive the tax offset?

If you received the offset in the previous financial year, then you’re automatically eligible to receive the tax offset for applicable medical expenses. If you didn’t, then you must have paid for disability aids, disability attendant services, or aged care services from an approved provider.

The Income Tax Assessment Act 1936 states:

For the 2013-14 to 2018-19 years of income, an amount that would otherwise be paid as medical expenses is treated as not being paid as medical expenses unless the payment:  

(a) relates to an aid for a person with a disability; or  

(b) relates to services rendered by a person as an attendant of a person with a disability; or  

(c) relates to care provided by an approved provider (within the meaning of the Aged Care Act 1997) of a person who:

(i) is approved as a care recipient under that Act; or

(ii) is a continuing care recipient within the meaning of that Act.

For families earning $176,000 or less, 20% of net medical expenses over $2,162 may be claimed. For families earning over $176,000, 10% of net medical expenses over $5,100 may be claimed. (Source)

If other tax offsets have reduced your tax payable to zero for the financial year, then you might not be eligible to receive the medical expenses tax offset.

How does Applied Behaviour Analysis count?

Under a tax determination last modified in 2013, Applied Behaviour Analysis is included in the category of ‘therapeutic treatment administered by direction of a legally qualified medical practitioner’.

For your child’s ABA to be eligible for the tax offset, the following conditions must both be met:

  • You must have received a medical expenses tax offset in 2012/13 or 2013/14.
  • The patient must have been referred to a particular practitioner for the treatment.

Further information

We recommend that you talk to your tax or accounting professional about this tax offset, and whether your expenses can be claimed under it. For more information, see the ATO website.

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