ATO Interpretative Decision
ATO ID 2004/148 (Withdrawn)
Income Tax
Medical expenses tax offset: water purification systemFOI status: may be released
-
This ATO ID is withdrawn because it contains a view in respect of a provision of the Income Tax Assessment Act 1936 that does not apply after the 2014-15 year of income. Despite its withdrawal, this ATO ID continues to be a precedential ATO view in respect of decisions for years of income up to, and including, the 2014-15 year of income.This document incorporates revisions made since original publication. View its history and amending notices, if applicable.
Status of this decision: Decision Withdrawn 27 October 2016.
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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 cost of purchasing and installing a water purification system that has been prescribed by a medical practitioner as part of the ongoing treatment of a medical condition a medical expense as defined in subsection 159P(4) of the Income Tax Assessment Act 1936 (ITAA 1936)?
Decision
No. The cost of purchasing and installing a water purification system that has been prescribed by a medical practitioner as part of the ongoing treatment of a medical condition is not a medical expense as defined in subsection 159P(4) of the ITAA 1936.
Facts
The taxpayer's dependant has a medical condition that requires ongoing treatment.
As part of the treatment of the medical condition a water purification system was purchased and installed in the taxpayer's house. The system is designed to eliminate chemicals from the household water supply which are considered to aggravate the dependant's condition. The purification system installed was a normal household water filtration system.
The purchase and installation of the water purification system was at the direction of a legally qualified medical practitioner.
Reasons for Decision
Section 159P of the ITAA 1936 provides for a rebate of tax (also referred to as a 'tax offset') in respect of net medical expenses paid by a taxpayer in respect of themselves or their dependants in excess of a threshold dollar amount specified in the legislation.
To qualify for the tax offset, the amount paid by the taxpayer must come within the definition of medical expenses in subsection 159P(4).
Under paragraph 159P(4)(f) medical expenses include payments 'in respect of a medical or surgical appliance (not otherwise specified in this definition) prescribed by a legally qualified medical practitioner'.
Taxation Ruling TR 93/34 describes a 'medical or surgical appliance' as being an instrument, apparatus or device that is manufactured, distributed or generally recognised as an aid to the function or capacity of a person with a disability or an illness. An appliance is an aid to function or capacity if it helps a person in performing activities of daily living.
Taxation Ruling TR 93/34 also provides that generally, a household or commercial appliance is not a 'medical or surgical appliance' and that it is necessary to look at the nature of the appliance,rather than the purpose for which it is prescribed or used.
The water purification system installed is a general household appliance which is not manufactured, distributed or generally recognised as an aid to the function or capacity of a person with a disability or illness.
The nature of the appliance is not altered as a consequence of it being installed at the direction of a medical practitioner.
Therefore the purification system is not a 'medical or surgical appliance' under paragraph 159P(4)(f).
Under paragraph 159P(4)(d), the definition of medical expenses also includes payments made for therapeutic treatment administered by direction of a legally qualified medical practitioner.
In Case R95 84 ATC 633; (1984) 27 CTBR(NS) 1154Case 148, the Board of Review found that therapeutic treatment necessitated the exercise of professional skill in the medical field in a way which normally involved the person administering the treatment using drugs or physical or mental processes for the purpose of curing or managing the disease or disorder.
The purchase and installation of the water purification system does not involve any exercise of professional skill in the medical field or any treatment for the purpose of curing or managing the disease. Therefore, the cost is not a payment for therapeutic treatment for the purpose of paragraph 159P(4)(d).
Accordingly, the cost incurred in the purchasing and installing of a water purification system does not qualify as a medical expense for the purpose of subsection 159P(4).
Date of decision: 29 January 2004Year of income: Year ending 30 June 2003
Legislative References:
Income Tax Assessment Act 1936
section 159P
paragraph 159P(4)(d)
paragraph 159P(4)(f)
Case References:
Case R95; Case 148
84 ATC 633
(1984) 27 CTBR (NS) 1154
Related Public Rulings (including Determinations)
Taxation Ruling TR 93/34
Keywords
Medical & surgical appliances
Medical expenses rebates
Medical expenses
ISSN: 1445-2782
| Date: | Version: | |
| 29 January 2004 | Original statement | |
| You are here → | 27 October 2016 | Archived |
Copyright notice
© Australian Taxation Office for the Commonwealth of Australia
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).
