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The Etax Blog: Tax Tips for Australians

Claim Your Dental Expenses as a Tax Deduction

“Can my dental expenses be deducted on my tax return?" 

Let’s discuss how you can maximise your tax refund by legally claiming your dental treatment costs as a deductible expense. 

The Specifics

For tax purposes, the Australian Tax Office lumps dental expenses together with other medical expenses. Unfortunately, this means you can’t claim back your dental expenses ‘dollar for dollar’ – but there are some savings to be had.

If you have more than $2060 net medical expenses (your total medical expenses minus Medicare and private health rebates) within one tax year, you can claim 20% of the amount above $2060 as a deductible expense. 

Example 1:

  • John spends a total of $2500 on dental and medical bills in the tax year
  • John received a total of $450 back from Medicare and $900 back from private health insurance
  • John’s net medical expenses = $2500 minus $450 (Medicare rebate) minus $900 (private health) = $1150
  • Because John’s net medical expenses are less than $2060, John can’t claim any medical expense deduction on his tax return

Example 2:

  • Mary spends a total of $7000 on dental and medical bills during one tax year
  • Mary received $875 back from Medicare and $2500 back from private health insurance
  • Mary’s net medical expenses = $7500 minus $875 (Medicare rebate) minus $2500 (private health) = $4125
  • Mary’s net medical expenses are more than $2060, so she can claim 20% of the amount above this threshold as a deduction
  • $4125 (net medical expenses) minus $2060 (ATO threshold) times 20% = $413
  • Mary can claim $413 as a tax deduction on her tax return

What you can claim:

  • Payments to dentists, orthodontists or registered dental mechanics
  • Payments to optometrists, including prescription glasses and contact lenses
  • Payments for medical aids prescribed by a doctor
  • Payments for laser eye surgery
  • Payments for artificial limbs or eyes and hearing aids

What you can’t claim:

  • Payments to a private health provider for insurance
  • Travel or accommodation expenses associated with you dental treatment
  • Dental services that are purely cosmetic
  • Non-prescription, chemist-type items sold 'over the counter' such as tablets for pain relief

The best way to keep track of your medical expenses

Each time you pay a dental or other medical bill, keep the receipt!  File tax receipts somewhere safe and simple to make things easy for you at tax time.

At the end of the financial year, you can also ask for an itemised statement from Medicare, your private health insurer and the chemist where you’ve had your prescriptions filled. Then it’s just down to some simple maths to work out your net medical expenses.

Are you unsure about what you can and can’t claim as a dental or medical expense? Send us an email on admin@etax.com.au or leave us a comment over at our Facebook page.

We've also created a dental expenses fact sheet. Feel free to print this useful tool off and share it with those you think will benefit from it!

2013 Budget Changes May Affect Your Ability to Claim:

The net medical expenses tax offset will slowly be phased out starting in July 2013. Only if you claim the offset in your 2012/13 tax return, can you then claim it again in 2013/14. Taxpayers who then claim it in 2013/14 can claim it again in 2014/15.

Unfortunately if you are not eligible to claim the offset in 2012-2013, you will not be able to claim the offset in future years. 

If you are unsure whether these changes will affect you, please contact us for more information. 

Topics
  • Tax Deductions
  • Increasing your refund