Top Tips: How to Claim Medical Expenses on Australian Taxes

Paying for healthcare out-of-pocket can be financially draining, especially if you’re a solopreneur or small business owner juggling both personal and professional expenses. But here’s a surprising fact: many Australians are missing out on key medical tax concessions simply because they don’t know they exist—or how to claim them. So, what if the stress of those medical bills could be eased at tax time? In this post, we’ll unpack how to claim medical expenses on Australian taxes, who qualifies, what counts, and practical tools that can make tax season far less painful. Time to discover if you’re leaving potential savings on the table.

Who Can Claim: Eligibility Criteria for Australians

Understanding the Eligibility Landscape

If you’ve ever scanned your tax return and wondered whether your recent physio visit or specialist consultation qualifies for a deduction, you’re not alone. But before diving into details, it’s essential to understand that the rules around how to claim medical expenses on Australian taxes have tightened significantly in recent years.

So, who exactly is eligible?

• Offset eligibility discontinued: As of 1 July 2019, the Australian Government phased out the Net Medical Expenses Tax Offset (NMETO), except for some very specific cases.
• Limited eligibility remains: You can only claim medical expenses if they relate to disability aids, attendant care, or aged care services and were incurred before 1 July 2019, under the transitional arrangements (which ended after the 2018–19 income year).
• Private Health Insurance rebate: Though not a deduction per se, many Australians benefit from a rebate on their insurance premium, which is calculated through your tax return.

What does this mean for most Australians today?

Most general medical expenses—doctor visits, dental work, prescriptions, optical—are no longer directly tax deductible. However, some costs related to specific income-producing health needs (e.g., medical assessments for professional drivers or health workers) might still be valid business deductions. This makes context extremely important.

Special circumstances to note

• NDIS participants: Expenses covered or not covered under the National Disability Insurance Scheme might affect your personal contributions.
• Self-funded retirees: If you don’t receive government benefits but incur large medical expenses, you might explore non-standard options through strategic tax planning.

Summary: Today, very few Australians can claim medical expenses directly unless they fit into exceptional categories. However, understanding where your situation falls within ATO guidelines can save unnecessary paperwork—or help guide decisions about private health coverage and deductible business expenses tied to your health.

What Medical Expenses Are Tax Deductible?

The Fine Print on Eligible Medical Expenses

The question of what medical expenses are tax deductible is often filled with confusion—and unfortunately, misinformation. As stated earlier, most out-of-pocket medical costs are no longer directly claimable. But there are still areas where deductions may apply, particularly if you’re a business owner or self-employed professional.

Medical expenses related to earning income

If the medical expenses are directly connected to your ability to earn income, you may be able to claim them as a deduction. Here are a few scenarios:

• PPE for healthcare workers: Masks, gloves, and sanitiser purchased for work can often be claimed as work-related expenses.
• Medical checks required for employment: If a health check is mandated for work (e.g., truck drivers, pilots), the cost may be deductible.
• Therapy or treatment related to work injury: If you’re self-employed and incurred the medical expense as a result of a work injury, it may be claimable under business expenses, especially if not covered by insurance.

Disability and aged care support

Only a few specific expenses remain eligible under the transitional tax offset:

• Disability aids: Items like hearing aids, wheelchairs, or prosthetic limbs.
• Attendant care: Personal care services at home for people with significant disability.
• Aged care services: Costs related to approved residential aged care may qualify within transitional rules.

Private Health Insurance Tax Benefits

While not a deduction for expenses paid, your private health policy may impact your taxes:

• PHI rebate: Claimed directly through your tax return or at the time of payment.
• Medicare levy surcharge offset: Avoided by maintaining adequate hospital coverage if you earn above the threshold.

Summary: In today’s setting, focus less on claiming general medical costs and more on strategic deductions tied to work or aged-care needs. Also, explore credits and offsets embedded within insurance policies, rather than out-of-pocket receipts.

Step-by-Step: How to Claim Medical Expenses Correctly

Turn Confusion Into Clarity

Now that you know what you can (and can’t) claim, let’s walk through how to claim medical expenses on Australian taxes step by step. Even if your expenses are limited, getting this process right is essential for accurate returns—and ensuring you don’t leave any legitimate refund behind.

Step 1: Identify Eligible Medical Expenses

• Review business-related health expenses (e.g., mandatory physical checks, safety equipment).
• Is the expense tied to aged care or disability support from previous years? Check if it falls under transitional tax offsets.

Step 2: Gather the Correct Documentation

• Receipts and invoices: Must clearly indicate date, amount paid, and medical practitioner/provider.
• Statement of coverage: Request a yearly statement from your private health insurer to assess PHI rebates.
• NDIS or aged care funding letters: These documents demonstrate out-of-pocket eligibility if relevant.

Step 3: Use myTax via the ATO Portal

If you’re lodging on your own, the ATO’s online platform, myTax, walks you through fields step-by-step. The system will prompt you based on what you’ve populated previously (like health fund details).

Step 4: Break Down the Expense Type

• Use the appropriate category (such as work-related expenses or private health rebate) rather than generic “medical” if required.
• Double-check which fields to complete with your accountant if unsure—getting this wrong may trigger audits.

Step 5: Lodge, Save, and Monitor

• After lodging your return, save all medical documents for at least five years in case of ATO queries.
• Track your return and rebate assessments through the myGov ATO dashboard.

Summary: Knowing how to claim medical expenses on Australian taxes is about more than ticking boxes—it requires correct categorisation, strong documentation, and a clear understanding of what applies to you. Get these details right, and you’ll streamline your lodgement, maximise your rebate, and stay compliant.

Avoid Mistakes: Common Claiming Errors to Watch

Every Dollar Counts—So Do the Details

One of the most frustrating tax season headaches is realising that your claim was denied or flagged after you’ve already submitted. When it comes to how to claim medical expenses on Australian taxes, even small mistakes can lead to rejected deductions, audits, or financial penalties. Here are the top errors Australians should avoid.

Error 1: Claiming Non-Deductible Medical Costs

• Expenses like general GP visits, over-the-counter drugs, or dental check-ups are no longer eligible under most conditions post-2019.
• Don’t claim costs reimbursed by private insurance or Medicare—it’s considered double-dipping.

Error 2: Confusing Insurance Rebates with Tax Deductions

• Many people incorrectly list their private health insurance premium as a “medical expense deduction.” It isn’t—it’s a tax rebate managed by the ATO.
• Incorrect reporting can cause delays in processing or even penalty notices.

Error 3: Poor Documentation or No Receipts

• Handwritten notes or estimates won’t cut it. If you don’t have official receipts stating provider name and date, the ATO may reject the claim.
• For business-related medical claims, include context (e.g., pre-employment medical requirement) in documentation or notes.

Error 4: Not Understanding Transitional Offsets

• Only claims up to the 2018–19 income year under the NMETO umbrella are considered. Many mistakenly believe this is still active.
• Don’t list outdated medical costs as deductions in your current year return.

Pro Tip:

When in doubt, check the ATO website’s ‘Deductions’ section or seek guidance from a registered tax agent. Staying accurate not only increases your chances of getting money back—it protects you from future ATO audits.

Summary: Avoiding common missteps is just as crucial as knowing how to claim medical expenses on Australian taxes. Stick to ATO-compliant categories, use only reimbursed service figures, and don’t assume every bill is deductible. Accuracy is your profit partner at tax time.

Tools & Services That Simplify Tax Filing for You

Tax Help, Digitised

If dealing with receipts, rebates, and fine print makes you want to run for the hills, know this: claiming medical expenses on your taxes doesn’t have to be a solo mission. With the right tools, you can simplify and even automate much of the process. Let’s look at the top options available in Australia that support how to claim medical expenses on Australian taxes.

1. myTax via myGov

• Free and official: Offered by the ATO and integrates directly with Medicare and health insurers.
• Pre-filled data: Pulls in health insurance information automatically if linked to myGov.

2. Online Accounting Platforms

Services like Xero, QuickBooks, or MYOB are excellent if you run a small business or operate as a freelancer:

• Upload receipts and tag healthcare-related costs linked to business operations.
• Automate expense tracking for audit-ready tax submissions.

3. Private Tax Software

• Etax and H&R Block: For individuals wanting a simple guided process, these services offer tax return platforms that identify possible medical offsets and alert you if claims are invalid.
• Smartfile: AI-driven deductions checker for business owners & entrepreneurs.

4. Health Fund Portals

Most private insurers offer downloadable tax statements that clearly outline your rebates and claimable segments. These are critical when navigating how to claim medical expenses on Australian taxes.

5. Professional Tax Agents

• Ideal for complex cases: If your medical expense history is intertwined with NDIS, aged care funding, or business costs, a licensed tax agent can save you time—and increase accuracy.
• They’ll help maximise your legal entitlements and shield you from non-compliance risks.

Summary: When exploring how to claim medical expenses on Australian taxes, the right digital or professional ally can make all the difference. These tools don’t just help you file—they help you win back precious time and peace of mind.

Conclusion

Claiming medical expenses on your Australian tax return may not be as straightforward as it once was, but that doesn’t mean your opportunities are gone. By deeply understanding your eligibility, focusing on deductible categories like work-related health costs or aged-care support, and using powerful tools — you can still make tax time work in your favour.

Key Takeaway: Knowing exactly how to claim medical expenses on Australian taxes could mean the difference between a missed opportunity and a well-earned refund.

So, whether you’re a startup founder, freelancer, or agency leader, don’t overlook the medical details hiding in your receipts and statements. The Australian tax system rewards those who know how to navigate its complexities—and that knowledge starts with you.

Maximise your return, protect your compliance, and let your finances stay as healthy as you are. After all, when your taxes are in order, everything else flows better.

– As an Amazon Associate I earn from qualifying purchases.

Explore more on this topic