ATO Interpretative Decision

ATO ID 2002/975

Income Tax

Private health insurance tax offset - premiums paid by taxpayer not covered by the private health insurance policy
FOI status: may be released

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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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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

Is the taxpayer entitled to a private health insurance tax offset under section 61-335 of the Income Tax Assessment Act 1997 (ITAA 1997) for premiums paid under a private health insurance policy which does not cover the taxpayer?

Decision

Yes. The taxpayer is entitled to a private health insurance tax offset under section 61-335 of the ITAA 1997 for premiums paid under a private health insurance policy which does not cover the taxpayer.

Facts

The taxpayer paid premiums for a private health insurance policy which provides the taxpayer's children with private health insurance.

The taxpayer is not covered by the private health insurance policy.

The private health insurance policy provides hospital, ancillary or combined cover to the taxpayer's children who are all eligible to claim benefits under the Medicare system.

Reasons for Decision

Under section 61-335 of the ITAA 1997 a tax offset will be allowed for private health insurance premiums provided two conditions are met:

•: the premiums must be paid by the taxpayer or their employer as a fringe benefit to them, in respect of an 'appropriate private health insurance policy' as defined in the Private Health Insurance Incentives Act 1998 (PHIIA); and
•: the premiums must be paid in the same income year in which they are claimed as a tax offset.

An 'appropriate private health insurance policy', under section 20-5 of the PHIIA, is a 'private health insurance policy' that provides hospital, ancillary or combined cover where every person covered by the policy is eligible to claim benefits under the Medicare system.

A 'private health insurance policy' is a contract of insurance entered into by a registered organisation in the course of carrying on a health insurance business as defined by the National Health Act 1953.

There is no requirement under section 61-335 of the ITAA 1997 that the private health insurance policy must cover the person paying the premium in order for them to be entitled to the private health insurance tax offset.

The taxpayer is paying premiums for a private health insurance policy which provides their children with private health insurance. The policy is considered to be an 'appropriate private health insurance policy' in accordance with section 20-5 of the PHIIA as the policy provides the taxpayer's children with hospital, ancillary or combined cover where they are all eligible to claim benefits under the Medicare system.

Therefore, the taxpayer is entitled to a private health insurance tax offset under section 61-335 of the ITAA 1997 for premiums paid under a private health insurance policy which does not cover the taxpayer.

Date of decision: 23 May 2002

Year of income: Year ending 30 June 2002 Year ending 30 June 2003 Year ending 30 June 2004

Legislative References:
Income Tax Assessment Act 1997
section 61-335

Private Health Insurance Incentives Act 1998
section 20-5

National Health Act 1953
The Act

Keywords
30% Private Health Insurance Rebate
Private health funds
Private health insurance offsets

Business Line: Small Business/Individual Taxpayers

Date of publication: 18 October 2002

ISSN: 1445-2782

history

	Date:	Version:
You are here	23 May 2002	Original statement
	8 April 2016	Updated statement
	23 February 2018	Archived

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