ATO Interpretative Decision

ATO ID 2003/171 (Withdrawn)

Income Tax

Medical expenses: tax offset - the cost of transporting an artificial limb for repairs
FOI status: may be released

This ATO ID is withdrawn. Guidance on the Net Medical Expenses Tax Offset can be found at Medical expenses on the ATO website (QC 31918).

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

CAUTION: This is an edited and summarised record of a Tax Office decision. This record is not published as a form of advice. It is being made available for your inspection to meet FOI requirements, because it may be used by an officer in making another decision.

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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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

Is the taxpayer entitled to a medical expenses tax offset under section 159P of the Income Tax Assessment Act 1936 (ITAA 1936) for the costs incurred in transporting an artificial limb for repairs?

Decision

No. The taxpayer is not entitled to a medical expenses tax offset under section 159P of the ITAA 1936 for the costs incurred in transporting an artificial limb for repairs as they are not 'in respect of' an artificial limb for the purposes of paragraph 159P(4)(e) of the ITAA 1936.

Facts

The taxpayer has an artificial limb.

The artificial limb developed a problem which needed to be corrected by the manufacturer.

The taxpayer incurred costs in transporting the artificial limb to the manufacturer to enable the repairs to be done.

Reasons for Decision

Subsection 159P(3A) of the ITAA 1936 provides that a tax offset is allowable to a taxpayer whose net medical expenses in the year of income exceed $1,500.

The medical expenses must be paid by the taxpayer in respect of themselves or their dependant.

The term 'medical expenses' is defined in subsection 159P(4) of the ITAA 1936. Paragraph (e) of that definition includes payments made 'in respect of an artificial limb (or part of a limb)'.

The scope of the phrase 'in respect of' for the purposes of paragraph 159P(4)(e) of the ITAA 1936 was dealt with in Case R12 84 ATC 165; 27 CTBR (NS) Case 63. The Tribunal held that the costs incurred by the taxpayer in transporting his son to enable artificial limbs to be fitted, did not fall within the definition of medical expenses in paragraph 159P(4)(e) of the ITAA 1936. The Tribunal found that whilst the expenditure could be regarded as a cost incurred to enable the artificial limbs to be fitted, the travel expenses could not be seen as a cost incurred 'in respect of ' the artificial limbs themselves.

This taxpayer incurred costs in transporting their artificial limb to the manufacturer for correction of the problem with that limb. The costs of transporting an artificial limb for repairs are similar in nature to the cost of transporting a limb for fitting purposes. Whilst it may be necessary to transport the artificial limb to facilitate the repairs, the transport expense cannot be seen as a cost in respect of the artificial limb itself.

The transport costs are not incurred 'in respect of' the artificial limb for the purposes the definition of medical expenses in paragraph 159P(4)(e) of the ITAA 1936.

Accordingly, the taxpayer is not entitled to a medical expenses tax offset under section 159P of the ITAA 1936 for the costs incurred in transporting an artificial limb for repairs.

Date of decision: 12 March 2003

Year of income: Year ended 30 June 2003

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

Case References:
Case R12/ Case 63
84 ATC 165
27 CTBR(NS) 535

Keywords
Aids for the disabled
Medical expenses
Medical expenses rebates

Business Line: Small Business/Individual Taxpayers

Date of publication: 28 March 2003

ISSN: 1445-2782

history

	Date:	Version:
	12 March 2003	Original statement
You are here	11 August 2017	Archived

Copyright notice

You are free to copy, adapt, modify, transmit and distribute material on this website as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).