How to make your tax return less of a bitter pill
AS everyone knows a visit to the doctor followed by a trip to the pharmacy is a very costly couple of hours! But did you know that there is a health expenses tax credit?
You can claim tax relief in respect of the cost of certain medical expenses paid by you. The tax relief up to 2008 was given at the marginal rate of tax of 41pc. However, from 2009 onwards, relief is given at the standard rate of tax of 20pc.
A claim for tax relief must be made within four years after the end of the tax year to which the claim relates -- this means, for instance, that 2009 expenses must be claimed by the end of 2013. Therefore, the last claim for relief at the higher rate of 41pc (2008 tax year) must be made by the end of 2012.
Health expenses cover a wide variety of matters and the most common include:
•Doctors' and consultants' fees.
•Diagnostic procedures carried out on the advice of a practitioner, for example, an X-ray.
•Drugs/medicines prescribed by a doctor/dentist/consultant.
•Maintenance or treatment in a hospital or approved nursing home.
•Physiotherapy or similar treatment prescribed by a practitioner.
•Other medical expenditure incurred, such as speech and language therapy and IVF treatment, may be relieved and the allowability of each expense should be considered individually.
Regarding all claims for 2007 and subsequent tax years you may claim tax relief in respect of any qualifying health expenses paid by you in respect of any individual.
For those of you who need a doctor or hospital treatment when abroad, the good news is these expenses are allowable also. As regards treatment outside the State, the following expenses qualify for tax relief:
•The cost of qualifying treatment carried out by a practitioner (GP, consultant or dentist) provided such practitioner is entitled, under the laws of the country in which the care is provided, to practise medicine or dentistry there.
•The cost of maintenance or treatment in a hospital, nursing home or clinic is allowable provided that the institution is a Revenue- approved hospital or nursing home.
With so many other treatments on offer in other countries, not available in Ireland, Revenue also allow relief to cover such expenses.
Where the relevant qualifying healthcare is only available outside of the State, then the cost of reasonable travelling and accommodation expenses are also allowable.
In such cases, the expenses of one person accompanying the patient may also be allowed where the condition of the patient requires it.
Where the patient is a child, the expenses of one parent may generally be allowed and, exceptionally, of both parents where it is clear that both have to be in attendance.
You should be aware that you cannot claim tax relief for any expenditure which:
•Has been, or will be, reimbursed by another body such as the VHI, Quinn Healthcare, Hibernian Aviva Health, the Health Service Executive or other body or person.
•Has been, or will be, the subject of a compensation payment.
•Relates to routine dental and ophthalmic care. Only dental expenses on a form Med 2 are allowable expenses.
Revenue do not require a copy of the receipts to support your health expenses claim.
However, you must keep all receipts for a period of six years in case your claim is subsequently chosen for detailed examination.
Simon Ball is the founder of SB Tax Consultants and an Associate of the Irish Taxation Institute. He worked for many years with tax firm BDO Simpson Xavier and specialises in the areas of corporate and personal tax planning work and the preparation and filing of returns for companies and individuals. He can be found at www.sbtaxconsultants.com