ATO Interpretative Decision
ATO ID 2001/182 (Withdrawn)
Income TaxMedical expenses tax offset - therapeutic treatment for autism
FOI status: may be released
This ATO ID is withdrawn because it contains a view in respect of a provision of the Income Tax Assessment Act 1936 that does not apply after the 2014-15 income year. Despite its withdrawal, this ATO ID continues to be a precedential ATO view in respect of decisions for income years up to, and including, the 2014-15 income year.This document has changed over time. View its history.
Status of this decision: Decision Withdrawn 27 October 2016.
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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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.
Can a taxpayer claim the medical expenses tax offset under section 159P of the Income Tax Assessment Act 1936 (ITAA 1936) for expenses incurred in administering Applied Behaviour Analysis (ABA) therapy to a child with autism?
Yes, a taxpayer can claim the medical expenses tax offset under section 159P of the ITAA 1936 for expenses incurred in administering ABA therapy to a child with autism.
The taxpayer's child was diagnosed with autism and was referred for ABA therapy by a qualified medical practitioner. The ABA therapy is an intensive behaviour modification program, designed by a clinical psychologist and implemented by therapists and supervisors.
Reasons for Decision
Section 159P of the ITAA 1936 provides for a rebate (medical expenses tax offset) to a taxpayer whose net medical expenses in the year of income exceed the threshold dollar amount specified in subsection 159P(3A) of the ITAA 1936.
Under subsection 159P(1) of the ITAA 1936, the expenses must be paid by a resident taxpayer in respect of themselves or their resident dependant. The taxpayer's child is a resident and is a 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 of medical expenses in subsection 159P(4) of the ITAA 1936 provides that medical expenses include payments 'for therapeutic treatment administered by direction of a legally qualified medical practitioner'.
In order to qualify for the tax offset such payments must meet the following conditions:
- they are for therapeutic treatment; and
- the therapeutic treatment is administered by 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 T67 (1967) 18 TBRD 346; (1967) 14 CTBR (NS) Case 31).
In Case R95 84 ATC 633; (1984) 27 CTBR (NS) Case 148, the Board of Review 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 disease or of diseased patients.
The Commissioner accepts that the ABA therapy is therapeutic treatment for the purposes of paragraph (d) of the definition of medical expenses in 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; (1969) 15 CTBR (NS) Case 30).
The taxpayer's dependant was referred for the ABA therapy by a legally qualified medical practitioner. Accordingly, the ABA therapy was administered by direction of a legally qualified medical practitioner. Consequently, the taxpayer is entitled to the medical expenses tax offset for the expenses incurred for the ABA therapy, such as expenses for program supervision, administration and therapy fees, under section 159P of the ITAA 1936.
|Date of amendment||Part||Comment|
|29 November 2013||Issue, Decision, Facts, Reasons for Decision||Amended for clarity and to remove dollar threshold.|
Case R95 / Case 148
84 ATC 633
(1984) 27 CTBR (NS) 1154
69 ATC 313
(1969) 15 CTBR (NS) 205 Case T67 / Case 31
(1967) 18 TBRD 346
(1967) 14 CTBR (NS)
Deductions & expenses
Medical expenses rebates
Rebates and offsets