Changes to the Net Medical Expenses tax offset

The Government will introduce a means test for the net medical expenses tax offset (‘NMETO’) from 1 July 2012.  For taxpayers with adjusted taxable income above the Medicare levy surcharge thresholds (i.e., $84,000 for singles and $168,000 for couples or families in 2012/13):

•    the threshold above which a taxpayer may claim the NMETO will be increased to $5,000 (currently $2,000); and

•       the rate of the tax offset will be reduced to 10% (currently 20%) for eligible out of pocket expenses incurred.