Removal of the net medical expenses tax offset (NMETO)

The Government has announced that it will scrap the NMETO.

The Government previously tightened the NMETO (as part of measures in the 2012-13 Budget) by means testing the offset and reduced it to 10 per cent of eligible out of pocket expenses incurred above the $5,000 claim amount.

The removal of the NMETO will be subject to a phased removal, such that taxpayers who will claim the NMETO in the 30 June 2013 to continue to be eligible to receive it in the 30 June 2014 year, and similarly those who are eligible for the NMETO in the 30 June 2014 year will be entitled to claim it in the 30 June 2015 year.

Tightening of deductions for work-related self-education expenses

As announced on 13 April 2013, the Government intends to cap deductions for work-related self-education expenses to $2,000 per annum from 1 July 2014.

At present, taxpayers who incur self-education expenses (such as fees for undertaking a course of study, conferences, and travel and accommodation) do not have any monetary limits imposed on their allowable tax deduction, and instead merely need to demonstrate that expenses are incurred in deriving current or future assessable income.

This measure will potentially impact all individuals undertaking further education whilst being employed, and the $2,000 cap seems low given the cost of attending university courses and conferences. Although the Treasurer has previously stated that the measure was aimed at abuse of the deduction through the claiming of First Class airfares to exotic overseas locations, such limited abuse could have been targeted with a more specific measure as opposed to a blanket measure affecting all taxpayers.