ATO Interpretative Decision
ATO ID 2002/217 (Withdrawn)
Income Tax
Medical Expenses Tax Offset - medical expenses paid for disabled relativeFOI status: may be released
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This ATO ID is withdrawn as it is a straightforward application of the law and is not interpretative.This document incorporates revisions made since original publication. View its history and amending notices, if applicable.
Status of this decision: Decision Withdrawn 16 April 2010
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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 entitled to a medical expenses tax offset under section 159P of the Income Tax Assessment Act 1936 (ITAA 1936) for medical expenses incurred for a disabled relative?
Decision
No. The taxpayer is not entitled to a medical expenses tax offset under section 159P of the ITAA 1936 as the taxpayer's disabled relative is not a dependant for the purposes of section 159P of the ITAA 1936.
Facts
The taxpayer's disabled relative is in receipt of a disability support pension which exceeds the cut-out threshold for an invalid relative tax offset.
The taxpayer provides additional financial support and maintenance for the relative, including the purchase of medicines and medical appliances, as the pension does not cover all of the relative's needs.
The amount of medical expenses incurred by the taxpayer for the invalid relative, after reimbursements from Medicare and health fund, exceeded $1250.
Reasons for Decision
A medical expense tax offset 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 medical expense tax offset is only available if the amount of medical expenses (reduced by any entitlement to reimbursement from a health fund or government authority) exceeds $1250. The tax offset is 20% of the amount by which the net medical expenses exceeds $1250.
Subsection 159P(4) of the ITAA 1936 defines dependant to mean:
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- the spouse of the taxpayer;
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- a child of the taxpayer less than 21 years of age;
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- a person in respect of whom the taxpayer is entitled to a tax offset under section 159J; or
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- a student or child less than 16 years of age who is not a student whom the taxpayer is entitled to a notional tax offset under section 159J.
Section 159J of the ITAA 1936 allows a dependant tax offset where a resident taxpayer contributes to the maintenance of an invalid relative, if the relative's separate net income does not exceed the cut-out threshold.
The invalid relative's separate net income exceeds the cut-out threshold to entitle the taxpayer to an invalid relative tax offset. The relative is therefore not a dependant for the purposes of section 159P of the ITAA 1936. Accordingly, expenses incurred by the taxpayer for the relative are not medical expenses of the taxpayer or a dependant of the taxpayer and a medical expense tax offset is therefore not allowable under section 159P of the ITAA 1936.
Date of decision: 4 February 2002
Legislative References:
Income Tax Assessment Act 1936
section 159J
section 159P
subsection 159P(4)
Keywords
Medical expenses rebates
Separate net income of dependants
ISSN: 1445-2782
| Date: | Version: | |
| 4 February 2002 | Original statement | |
| You are here → | 16 April 2010 | Archived |