ATO Interpretative Decision
ATO ID 2002/275
Income Tax
Medical expenses tax offset - reimbursements from an overseas health insurance fundFOI status: may be released
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This ATO ID is amended to remove reference to superseded dollar threshold amount and to reconcile current terminology ('tax offset') with legislative wording of section 159P of the ITAA 1936.This document incorporates revisions made since original publication. View its history and amending notices, if applicable.
This ATOID provides you with the following level of protection:
If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.
Issue
Is a taxpayer required to reduce their medical expenses by reimbursements received for those expenses from an overseas health insurance fund when calculating their entitlement to a medical expense tax offset under section 159P of the Income Tax Assessment Act 1936 (ITAA 1936)?
Decision
Yes. For medical expense tax offset purposes, an overseas health insurance fund is a fund, society or association whose payments reduce the amount of medical expenses available for the tax offset.
Facts
The taxpayer is a member of an overseas health insurance fund.
The fund is based overseas and is not a registered fund for the purposes of claiming a 30% private health insurance rebate. Furthermore, the fund does not provide the hospital cover required to avoid paying the Medicare levy surcharge.
The taxpayer incurred medical expenses exceeding $1250.
The overseas health insurance fund partially reimbursed the taxpayer for the medical expenses incurred.
Reasons for Decision
The medical expense tax offset (also known as a 'rebate') is available to a taxpayer under section 159P of the ITAA 1936, where the taxpayer incurs medical expenses for themselves or a dependant who is an Australian resident. The tax offset is equal to 20% of the amount by which the medical expenses exceeds the threshold dollar amount specified in the section.
However, subsection 159P(1) of the ITAA 1936 provides that any amount which the taxpayer or any other person is entitled to be paid by a government, public authority, society, association or fund must reduce the amount of the medical expenses for the purposes of calculating the tax offset.
Subsection 159P(1) of the ITAA 1936, does not require that the authority, society, association or fund be a resident of Australia.
The taxpayer incurred medical expenses and was entitled to reimbursement from an overseas health insurance fund. The taxpayer is required to reduce the amount of the medical expenses by the reimbursement for the purposes of calculating their entitlement to the medical expense tax offset under section 159P of the ITAA 1936.
Date of decision: 6 February 2002Year of income: Year ended 30 June 2001
Legislative References:
Income Tax Assessment Act 1936
section 159P
subsection 159P(1)
Keywords
Medical expenses
Medical expenses rebates
ISSN: 1445-2782
| Date: | Version: | |
| You are here | 6 February 2002 | Original statement |
| 17 October 2014 | Updated statement | |
| 11 August 2017 | Archived |