ATO Interpretative Decision

ATO ID 2001/182 (Withdrawn)

Income Tax

• This ATO ID is withdrawn because it contains a view in respect of a provision of the Income Tax Assessment Act 1936 that does not apply after the 2014-15 income year.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.
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Issue

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?

Decision

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.

Facts

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:

(1)

they are for therapeutic treatment; and

(2)

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.

Amendment History

Legislative References:
Income Tax Assessment Act 1936
   section 159P
   subsection 159P(1)
   subsection 159P(3A)
   subsection 159P(4)

Case References:
Case R95 / Case 148
   84 ATC 633
   (1984) 27 CTBR (NS) 1154

Keywords
Deductions & expenses
Dependants
Medical expenses
Medical expenses rebates
Rebates and offsets

Business Line:  Small Business/Individual Taxpayers

Date of publication:  10 August 2001

ISSN: 1445-2782