Kevin Rudd was the prime minister of Australia for a very short time. One of the small tax changes that he implemented while he was prime minister was was increasing the medical expense rebate threshhold.
Out of all the major tax changes, this very little one really gets up my nerve in a big way. Let me explain.
Taxpayers in Australia will receive a tax offset for medical expenses they incur equivalent to 20% of the excess above $1500 (before Rudd changed it).
Let me give you an example:-
If you spent $5,000 on medical expenses
$5,000 – $1,500 = $3,500
$3,500 x 20% = $700
So if you incurred $5,000 in medical expenses (net of any reimbursements from your private health insurance or medicare), you will get tax refund of $700.
In the 2011 tax year, the threshold is now $2,000.
Let me show you the effect of this little change:-
If you spent $5,000 on medical expenses
$5,000 – $2,000 = $3,000
$3,000 x 20% = $600
The net difference of this small change is that the same taxpayer loses out on $100.
SO WHAT??
You might say $100 so what!
Let me put it another perspective. Take the time and add up all the medical expenses in your household. The majority of families will not ever exceed the $1,500 threshold.
Yeah, so what??!!! You might ask again.
I put it simply, if the normal taxpayer will never exceed $1,500 in net medical expense in a year, who would? That’s right, people who are genuinely sick or need medical attention.
If someone needs to spend more than $1,500 in a year, this person is sick and needs help. They will also need as much financial assistance as possible and ever dollar they can get back in their tax return is what they need. If you have family or friends who are sick you will totally agree with me.
I believe this revenue grabbing change to the tax system is below the belt. It is below the belt for the Australians who are sick with life threatening illnesses, sick with life long illnesses, sick with illnesses which no one really know what the cure is.
Unfortunately, the threshold is set to rise in the next few years and there is nothing we can do about it – just hope you don’t get sick and need to spend on doctors or medicine!
Juen Phie
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