ATO Interpretative Decision

ATO ID 2002/624

Income Tax

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

Issue

Is a taxpayer entitled to a medical expenses tax offset under to section 159P of the Income Tax Assessment Act 1936 (ITAA 1936) for expenses incurred in relation to providing 'Spalding Method' learning activities for their dependant?

Decision

No. A taxpayer is not entitled to a medical expenses tax offset under section 159P of the ITAA 1936 for expenses incurred in relation to providing 'Spalding Method' learning activities for their dependant.

Facts

The taxpayer's dependant suffered from a condition which resulted in a reduced capacity to learn effectively.

A medical practitioner suggested that the dependant required a specific learning program called the 'Spalding Method' and recommended that the program be undertaken at a particular institution. The 'Spalding Method' is an educational program which is designed to assist people to improve their scholastic/learning abilities.

The taxpayer incurred expenditure in providing access to 'Spalding Method' learning activities for their dependant. Although trained in the 'Spalding Method', the people providing the learning activities had no medical training or skills.

Reasons for Decision

Subsection 159P(3A) of the ITAA 1936 provides that a tax offset is allowable to a taxpayer whose net medical expenses in the year of income exceed $1250. The amount of the rebate is 20% of the excess over $1250.

The expenses must be paid by a resident taxpayer in respect of themselves or a resident dependant as defined in subsection 159P(4) of the ITAA 1936.

Subsection 159P(4) of the ITAA 1936 defines what are 'medical expenses'. Paragraph 159P(4)(d) of the ITAA 1936 includes in the definition of medical expense, a payment 'for therapeutic treatment administered by direction of a legally qualified medical practitioner.'

It was held in Case A53 69 ATC 313; 15 CTBR (NS) Case 30 that the mere suggestion or recommendation by a medical practitioner that the patient undergoes therapeutic treatment is not sufficient for the payment to qualify as medical expenses. The patient would have to be referred by a medical practitioner to a particular person for specific treatment.

Therapeutic treatment involves the exercise of professional skill in the medical field in a way which normally involves the person administering the treatment using drugs or physical or mental processes of one kind or another for the purpose of curing or managing disease (Case R95 84 ATC 633; 27 CTBR (NS) Case 148).

Furthermore, therapeutic treatment as a concept is concerned with healing or curing, rather than preventing the need for therapy (18 TBRD Case T67; 14 CTBR (NS) Case 31). Although the treatment must be administered by direction of a legally qualified medical practitioner, the treatment need not be administered by such a practitioner.

Undertaking a 'Spalding Method' education program or learning activities does not involve any healing or curing, nor is it treatment administered by a person exercising skill in the medical field. The 'Spalding Method' is not therefore therapeutic treatment.

In addition, the learning activities were not undertaken 'at the direction' of the medical practitioner.

As these expenses do not fall within the definition of 'medical expenses', the taxpayer is not eligible for the medical expenses tax offset under section 159P of the ITAA 1936 in relation to those expenses.

Year of income:  Year ended 30 June 2000

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

Case References:
Case A53/Case 30
   69 ATC 313
    15 CTBR (NS)

Keywords
Medical expenses rebates
Medical expenses
Rebates

Business Line:  Small Business/Individual Taxpayers

Date of publication:  31 May 2002

ISSN: 1445-2782