ATO Interpretative Decision

ATO ID 2001/182

Income Tax

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

Issue

Is a medical expense rebate allowable pursuant to section 159P of the Income Tax Assessment Act 1936 (ITAA 1936) for expenses incurred in administering an autistic child's Applied Behaviour Analysis (ABA) therapy?

Decision

Yes, a medical expense rebate is allowable pursuant to section 159P of the ITAA 1936 for expenses incurred in administering an autistic child's ABA therapy.

Facts

The taxpayer's dependant was diagnosed with autism and ABA therapy was recommended by a qualified medical practitioner.

The cost of the therapy does not qualify for a Medicare or a Private Health Insurance rebate.

Reasons for Decision

Subsection 159P(3A) of the ITAA 1936 provides that a rebate is allowable to a taxpayer whose net medical expenses in the year of income exceed $1250.

The expenses must be paid by a resident taxpayer in respect of themselves or their resident dependant. The taxpayer's child is a resident dependant in accordance with subsection 159P(4) of the ITAA 1936.

Medical expenses are defined in subsection 159P(4) of the ITAA 1936.

Paragraph (d) of the definition includes payments 'for therapeutic treatment administered by direction of a legally qualified medical practitioner'.

In order to qualify for the rebate such payments must meet the following conditions;

(1)

they are for therapeutic treatment; and

(2)

the therapeutic treatment is administered by the direction of a legally qualified medical practitioner.

The general concept of therapeutic treatment is healing or curing rather than preventing the need for therapy (Case S2, 85 ATC 102; 17 TBRD Case S8).

In Case R95 84 ATC 633; Case 148 27 CTBR (NS) 1154, the Administrative Appeals Tribunal found that 'therapeutic treatment' necessitated the exercise of professional skill in the medical field. This would normally involve the person administering the treatment using chemical agents or drugs or some physical and mental processes which are directed towards the cure or management of a disease or ailment.

The Commissioner accepts that the ABA therapy is therapeutic treatment for the purposes of subsection 159P(4) of the ITAA 1936.

The therapeutic treatment must be administered by direction of a legally qualified medical practitioner.

A mere suggestion or recommendation by a doctor to a patient that the patient undergo therapeutic treatment is not enough for the associated expenses to qualify as medical expenses. The patient must be referred to a particular person for the therapeutic treatment (Case A53 69 ATC 313).

The taxpayer's dependant was referred for the ABA therapy program by a legally qualified medical practitioner. Accordingly, the expenses the taxpayer incurred which relate directly to the administering of this program are rebatable under section 159P of the ITAA 1936. Such allowable expenses would be those for program supervision, administration and therapy fees.

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

Case References:
Case R95 / Case 148
   84 ATC 633
   27 CTBR (NS) 1154

Keywords
Dependants
Medical expenses
Medical expenses rebates
Rebates

Business Line:  Small Business/Individual Taxpayers

Date of publication:  10 August 2001

ISSN: 1445-2782