ATO Interpretative Decision

ATO ID 2001/131

Income Tax

• This document incorporates revisions made since original publication. View its history and amending notices, if applicable.

Issue

Whether the taxpayer can claim the medical expenses rebate under section 159P of the Income Tax Assessment Act 1936 (ITAA 1936) for the following expenses incurred to assist a child with autism:

(1)

the cost of behavioural therapy; and

(2)

the cost of computer games, toys and books for use in the therapy.

Decision

1. The costs of program supervision, administration and therapy fees in respect of the behavioural therapy are rebatable medical expenses as payments made for therapeutic treatment administered by direction of a legally qualified medical practitioner under paragraph 159P(4)(d) (ITAA 1936).

2. Expenses incurred in respect of the purchase of materials for the program are not medical expenses under subsection 159P(4) (ITAA 1936).

Facts

The taxpayer has a child who is autistic. The child is examined by a Paediatric Register, who refers the child to a behavioural therapy program run by a clinic that specialises in treating autism and related disorders. The Paediatric Register, who is a legally qualified medical practitioner, wishes to review the progress of the treatment at regular intervals.

The child undergoes intensive behavioural therapy, which is conducted by a psychologist. The taxpayer pays the costs of program supervision, therapy and administration associated with the treatment. The taxpayer also purchases materials, such as computer games, books and toys, for use in the therapy.

Reasons For Decision

Subsection 159P(1) (ITAA 1936) provides that an amount paid by a taxpayer in the year of income as medical expenses for either the taxpayer or a resident dependant of the taxpayer, less any amount paid to the taxpayer in respect of those medical expenses, shall be treated as a rebatable amount in respect of that year of income. The amount of the rebate of tax is determined under subsection 159P(3A) (ITAA 1936).

To qualify for the rebate, the amount paid by the taxpayer must come within the definition of 'medical expenses' in subsection 159P(4) (ITAA 1936).

Under paragraph 159P(4)(d) (ITAA 1936), the definition of 'medical expenses' includes payments made for therapeutic treatment administered by direction of a legally qualified medical practitioner.

In Case R95 84 ATC 633, the Tribunal found that 'therapeutic treatment' necessitated the exercise of professional skill in the medical field in some positive way, which would normally involve the person undertaking the act of administering the treatment using chemical agents or drugs or a physical or mental process of one kind or another in a manner that is directed towards the cure or management of disease or of diseased patients

Therapeutic treatment is administered by direction of a legally qualified medical practitioner when the treatment is undergone as part of the medical practitioner's care of the patient. Treatment may be administered by the direction of the medical practitioner when the patient is referred by the practitioner to a particular specialist for specific treatment: Case A53 69 ATC 313 at 314.

In this case, the behavioural therapy is a form of therapeutic treatment, as it involves the exercise of professional skill in a manner that is directed toward the management of the child's autism. The taxpayer's child was referred to the specialist behavioural therapy program for children with autism by a legally qualified medical practitioner. The treatment is clearly undergone as part of the medical practitioner's ongoing care of the child as the physician regularly reviews the child's progress. Accordingly, the costs associated with the provision of behavioural therapy to the taxpayer's child are medical expenses under paragraph 159P(4)(d) (ITAA 1936).

Paragraph 159P(f) (ITAA1936) provides that medical expenses include payments made in respect of a medical or surgical appliance prescribed by a legally qualified medical practitioner. Taxation Ruling TR 93/34 explains the meaning of a 'medical or surgical appliance' as an instrument, apparatus or device which is manufactured as, distributed as, or generally recognised to be an aid to the function or capacity of a person with a disability or illness.

Paragraph 4 of Taxation Ruling TR 93/34 states that an appliance is an aid to function or capacity if it helps the person with the disability or illness perform the activities of daily living. As materials such as computer games, books and toys clearly do not aid function or capacity, these materials are not medical expenses that qualify for the rebate under section 159P (ITAA 1936).

Legislative References:
Income Tax Assessment Act 1936
   section 159P
   subsection 159P(1)
   subsection 159P(3A)
   subsection 159P(4)
   paragraph 159P(4)(d)
   paragraph 159P(4)(f)

Case References:
Case R95
   84 ATC 633

Related Public Rulings (including Determinations)
TR 93/34

Related ATO Interpretative Decisions
ATO ID 2001/29

Keywords
Rebates
Medical expenses
Medical expenses rebates

Business Line:  Small Business/Individual Taxpayers

Date of publication:  1 August 2001

ISSN: 1445-2782