Medical tax offset still worthwhile

The decision by the federal government to lift the qualifying threshold for the Medical Expenses Offset from $1500 a year to $2000 means fewer taxpayers will qualify for the offset (or rebate) in 2010-11.

Despite this the offset still has the potential to deliver worthwhile tax savings for those who have significant medical bills, since it pays a rebate of 20% for every dollar a family spends on medical bills in excess of the threshold.

In this case "family" means you, your spouse (including a de facto spouse) and your children aged under 21. If a child turns 21 during the financial year you can claim medical expenses incurred prior to his or her birthday.

The value of the medical expenses offset is enhanced by the relatively long list of outlays that can be claimed.

These include payments to doctors, nurses, chemists and hospitals that relate to the treatment of illness, payments to dentists and opticians, and the cost of therapeutic treatments (eg physiotherapy) if you have a doctor's referral.

Ideally you should collect all your receipts throughout the year but if you aren't particularly well organised you will be able to contact Medicare and your health insurer at the end of the financial year and get them to send you annual statements covering everyone who is listed on your Medicare card.

Those who go mainly to just one pharmacy should also be able to get a statement of the amount you spent on prescription medicines during the year.

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