ATO Interpretative Decision
ATO ID 2001/243
Income Tax
Medical expenses tax offset - therapeutic treatmentFOI status: may be released
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This ATO ID is amended to remove reference to superseded dollar threshold amount and to reconcile current terminology ('tax offset') with legislative wording of section 159P of the ITAA 1936.This document has changed over time. View its history.
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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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
Does therapeutic treatment need to be at the direction of a legally qualified medical practitioner in order to be considered a medical expense as defined in subsection 159P(4) of the Income Tax Assessment Act 1936 (ITAA 1936)?
Decision
Yes, therapeutic treatment must be at the direction of a legally qualified medical practitioner in order to be considered a medical expense as defined in subsection 159P(4) of the ITAA 1936.
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 the section. The amount of the tax offset is equal to 20% of the expenditure that exceeds the threshold amount.
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 ' (emphasis added).
It was held in Case A53 69 ATC 313; (1969) 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.
In the context of subsection 159P(4) of the ITAA 1936, 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; (1984) 27 CTBR (NS) Case 148).
Furthermore, therapeutic treatment as a concept is concerned with healing or curing, rather than preventing the need for therapy (Case T67 (1967) 18 TBRD 346; (1967) 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.
Physiotherapy, massage, chiropractic treatment and osteopathy are common examples of therapeutic treatment.
Amendment History
| Date of amendment | Part | Comment |
|---|---|---|
| 29 November 2013 | Decision,Reason for Decision, Legislative References, Keywords | Amended for clarity and to correct legislative reference. |
Legislative References:
Income Tax Assessment Act 1936
section 159P
subsection 159P(4)
Case References:
Case R95 / Case 148
84 ATC 633
(1984) 27 CTBR (NS)
69 ATC 313
(1969) 15 CTBR (NS) Case T67 / Case 31
(1967) 18 TBRD 346
(1967) 14 CTBR (NS)
Keywords
Deductions & expenses
Medical expenses
Medical expenses rebates
Rebates and offsets
ISSN: 1445-2782
| Date: | Version: | |
| 31 July 2001 | Original statement | |
| You are here | 29 November 2013 | Updated statement |
| 27 October 2016 | Archived |