One of the announcements in the Budget was a proposal to means test the net medical expense tax offset. This offset is currently available to anyone who has unreimbursed medical expenses over $2,000 in a financial year, assessed as a family.

The proposals mean that the tax offset will no longer be available to anyone with adjusted taxable income over the Medicare Levy Surcharge threshold which is $84,000 for a single person or $168,000 for a couple or family. In addition, the offset will only be available for eligible medical expenses over $5,000 at the rate of 10% (down from 20%).

Eligible medical expenses include (but not limited to):

• most aged care fees
• doctor, dentist and optometrist fees
• hospital fees
• payment for therapeutic treatment administered at the direction of a doctor.

This change is proposed to take effect from 1 July 2012, so if possible, it would be advisable to bring forward any medical expenses if you are likely to exceed the current threshold of $2,000 in the current tax year.