The Government announced in the 2012-13 Budget that it will introduce a means test for the net medical expenses tax offset (NMETO) from 1 July 2012.
Under the new means test, people with adjusted taxable income above the Medicare levy surcharge thresholds ($84,000 for singles and $168,000 for couples or families in 2012‑13), the amount above which a taxpayer may claim the NMETO will be increased to $5,000 (indexed annually thereafter). The rate of offset will be reduced to 10 per cent of eligible out‑of pocket expenses incurred above the $5,000 claim amount. People with income below the income thresholds will be unaffected by this change.
Exposure draft legislation and explanatory material which would implement the announced change has been released for public comment.