ATO Interpretative Decision

ATO ID 2002/353

Income Tax

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

Issue

Is the taxpayer entitled to claim the medical expenses tax offset under section 159P of the Income Tax Assessment Act 1936 (ITAA 1936) for expenses incurred in the purchase of herbal medication from a health food store?

Decision

Yes. The taxpayer is entitled to claim the medical expenses tax offset under section 159P of the ITAA 1936 as the purchase of herbal medication from a health food store qualifies as a medical expense.

Facts

The taxpayer suffers from a neurological disorder. The progress of the illness is monitored by a specialist medical practitioner.

The taxpayer was ordered to undergo treatment with herbal medication prescribed by a legally qualified specialist medical practitioner for the purpose of managing the illness and reducing its symptoms.

The taxpayer incurred expenditure on herbal medication. Some of the herbal medications were purchased from a health food store and a local supermarket.

The amount of medical expenses incurred by the taxpayer, 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 expenses 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.

Medical expenses are defined in subsection 159P(4) of the ITAA 1936 to include a payment 'for therapeutic treatment administered by direction of a legally qualified medical practitioner' (paragraph (d) of the definition).

Therapeutic treatment as a concept is concerned with healing or curing, rather than preventing the need for therapy (Case T67 (1968) 18 TRBD 346; (1967) 14 CTBR (NS) Case 31). 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 the disease (Case R95 84 ATC 633; (1984) 27 CTBR (NS) Case 148).

The herbal medication was prescribed by the taxpayer's specialist medical practitioner for the purposes of treating, curing or managing the taxpayer's illness. The treatment is concerned with the healing process and involved the exercise of professional skill in the medical field. The progress of the taxpayer's illness, and the effects of the treatment, are monitored by the specialist medical practitioner. The herbal medication is considered therapeutic treatment within paragraph (d) of the definition of medical expenses in subsection 159P(4) of the ITAA 1936.

The fact that the required herbs or vitamins are purchased from a health food store or supermarket does not affect the chemical composition or physiological effects of a particular herb or vitamin. The source of therapeutic treatment is not usually relevant to the determination of whether the purpose of a treatment is to heal, cure or manage an illness or disease.

Herbal medication was purchased by the taxpayer from health food stores and supermarkets as 'therapeutic treatment' on direction from a legally qualified specialist medical practitioner. The expenses fall within paragraph (d) of the definition of medical expenses in subsection 159P(4) of the ITAA 1936. As the net medical expenses incurred by the taxpayer exceeded $1250, the taxpayer is entitled to claim the medical expenses tax offset under section 159P of the ITAA 1936.

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

Case References:
Case T67 / Case 31
   (1968) 18 TRBD 346
   (1967) 14 CTBR (NS) 170

Related ATO Interpretative Decisions
ATO ID 2001/243
ATO ID 2002/345

Keywords
Dependants
Medical expenses rebates
Rebates

Business Line:  Small Business/Individual Taxpayers

Date of publication:  28 March 2002

ISSN: 1445-2782