ATO Interpretative Decision

ATO ID 2002/64 (Withdrawn)

Income Tax

Medicare levy exemption- taxpayer entitled to free medical treatment
FOI status: may be released
  • This ATO ID is a straight application of the law and does not contain an interpretative decision.
    This document incorporates revisions made since original publication. View its history and amending notices, if applicable.

CAUTION: This is an edited and summarised record of a Tax Office decision. This record is not published as a form of advice. It is being made available for your inspection to meet FOI requirements, because it may be used by an officer in making another decision.

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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 the taxpayer, who is entitled to free medical treatment under the Veterans' Entitlements Act 1986, entitled to a Medicare levy exemption under section 251T of the Income Tax Assessment Act 1936 (ITAA 1936)?

Decision

Yes. The taxpayer who is entitled to free medical treatment under the Veterans' Entitlements Act is a prescribed person and is exempt from the Medicare levy under section 251T of the ITAA 1936.

Facts

Both the taxpayer and their spouse are recipients of a Veterans Affairs Repatriation Health Card (Gold Card).

The recipient of a Gold Card is entitled to full free medical treatment for all medical conditions.

Reasons for Decision

Paragraph 251S(1)(a) of the ITAA 1936 provides that a Medicare levy is levied at the rate applicable in the Medicare Levy Act 1986 from the 1984 year of income onwards on the taxable income of a person who at any time during the year of income was a resident.

However, paragraph 251T(a) of the ITAA 1936 provides that the Medicare levy is not payable by a 'prescribed person'. Whether a person is a 'prescribed person' for the purposes of the Medicare levy is determined by section 251U of the ITAA 1936.

Paragraph 251U(1)(b) of the ITAA 1936 provides that a person will be a 'prescribed person' where they are entitled under the Veterans' Entitlements Act to free medical treatment in respect of every incapacity, disease or disability. Subsection 251U(2) of the ITAA 1936 provides that entitlement to prescribed person status is conditional on the taxpayer's dependants also being prescribed persons.

As the taxpayer and their spouse are recipients of the Gold Card, which entitles them to full free medical treatment, they are both 'prescribed persons' and are therefore the taxpayer is exempt from the Medicare levy under section 251T of the ITAA 1936.

Date of decision:  16 October 2001

Year of income:  Year ended 30 June 2001

Legislative References:
Income Tax Assessment Act 1936
   paragraph 251S(1)(a)
   section 251T
   paragraph 251T(a)
   paragraph 251U(1)(b)
   subsection 251U(2)

Medicare Levy Act 1986
   The Act

Veterans' Entitlements Act 1986
   The Act

Keywords
Medicare levy
Medicare levy exemptions

Business Line:  Small Business/Individual Taxpayers

Date of publication:  24 January 2002

ISSN: 1445-2782

history
  Date: Version:
  16 October 2001 Original statement
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