Are Age Care Fees Tax Deductible? Let’s find out!
As the population begins to age, there is an ever-increasing need for care facilities that cater to senior citizens. This means there are more and more people looking for high-quality facilities where they can comfortably enjoy retirement. This expanding need for elderly care also means there are more people asking: Are age care facilities tax deductible? This is an extremely pertinent question for many, and could even be the defining factor in deciding what kind of services they can best afford.
How to find out…
When applying for aged care tax deductions, the amount you need to know is your net medical expenses. This number is equivalent to your total medical expenses minus refunds from the National Disability Insurance Scheme, as well as any private health insurance that you receive, or are entitled to receive.
In Australia, there are a range of medical expenses that can be claimed as tax deductions, aged care included. This tax reduction is income tested, meaning that the net expenses that you can claim are based on your adjustable tax income (ATI), and family status. For a single individual with an ATI of $90,000 a year or less, a tax deduction of 20% of net medical expenses related to aged care over $2,265 can be claimed. For a single individual with an ATI above $90,000 a year, the deduction that can be claimed is 10% of medical expenses over $5,343.
For families, the situation is slightly different. For a family making an ATI under $180,000 a year 20% of net medical expenses over $2,265 can be claimed for tax reduction, while any family with an ATI lower than that amount can claim 10% net medical expenses over $5,343 as a tax deduction. There are also additional deductions for those who can claim dependent children, so long as they can prove their dependence and they are tax-paying residents of Australia.
Important factors to consider when asking “are age care facilities tax deductible?”
Keep in mind is that for aged care expenses, as well as disability aids, and attendant care, tax deductions can only be applied if one has used an approved care provider. This means that before choosing a suitable provider, a certain amount of research should be done so as to make sure the tax deductions can be claimed. Most care providers should be able to answer these questions themselves, and most reputable providers should be government approved.
When it comes to asking yourself the question, “are age care fees tax deductible?” there are many factors to keep in mind that will affect how much of a deduction you can claim. The first step to take is to find an approved care provider, then calculate your net expenses, and figure out your tax status, or talk to someone, like an accountant, who can help do this for you.