ATO Interpretative Decision

ATO ID 2002/214

Income Tax

• This document incorporates revisions made since original publication. View its history and amending notices, if applicable.

Issue

Is a taxpayer entitled to claim a medical expense tax offset under section 159P of the Income Tax Assessment Act 1936 (ITAA 1936) for expenses paid for a hair transplant operation performed on their spouse?

Decision

Yes. The taxpayer is entitled to claim a medical expense offset under section 159P of the ITAA 1936 for expenses incurred on a hair transplant operation performed on their spouse, as the expense is considered to be an eligible medical expense.

Facts

The taxpayer and spouse are residents of Australia.

The taxpayer's spouse had a hair transplant. A legally qualified doctor performed the surgery. The cost of the surgery exceeded $1250.

The medical expenses have not been reimbursed, nor are they eligible to be reimbursed, from a government or public authority or a society, association or fund.

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.

Subsection 159P(4) defines 'medical expenses' to include payments to a legally qualified medical practitioner, or a public or private hospital, in respect of an illness or operation.

Taxation Determination TD 94/5 states that where cosmetic surgery is performed by a legally qualified medical practitioner, it falls within the meaning of 'operation' for medical expense purposes.

The taxpayer's spouse has had hair transplant surgery performed by a legally qualified medical practitioner. The surgery constitutes an operation for the purposes of a medical expense. As the net medical expenses exceeded $1250, the taxpayer is entitled to a medical expense tax offset under section 159P of the ITAA 1936.

Year of income:  Year ended 30 June 2001

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

Related Public Rulings (including Determinations)
TD 94/5

Keywords
Medical expenses
Medical expenses rebates

Business Line:  Small Business/Individual Taxpayers

Date of publication:  28 February 2002

ISSN: 1445-2782