ATO Interpretative Decision

ATO ID 2007/70 (Withdrawn)

Income Tax

• This ATO ID is withdrawn because it contains a view in respect of a provision of the Income Tax Assessment Act 1936 that does not apply after the 2014-15 year of income.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.

Issue

Are payments to a doctor and hospital in relation to an operation to change the taxpayer's voice ineligible medical expenses for the purposes of subsection 159P(4) of the Income Tax Assessment Act 1936 (ITAA 1936) where the operation is a consequence of treatment for a gender disorder?

Decision

Yes. Payments to a doctor and hospital in relation to an operation to change the taxpayer's voice are ineligible medical expenses for the purposes of subsection 159P(4) of the ITAA 1936 where the operation is a consequence of treatment for a gender disorder.

Facts

The taxpayer is a resident of Australia.

In consequence of the treatment for a gender disorder, the taxpayer underwent an operation on their vocal cords to change their voice to make it sound more feminine.

The operation was undertaken in a hospital by a legally qualified medical practitioner.

The taxpayer incurred expenses in relation to the doctor and the hospital.

The taxpayer was not entitled to a medicare benefit under Part II of the Health Insurance Act 1973.

Reasons for Decision

'Ineligible medical expenses' are defined in subsection 159P(4) of the ITAA 1936 as payments:

(a)

to a legally qualified medical practitioner, nurse or chemist, or a public or private hospital, in respect of a cosmetic operation that is not a professional service for which a medicare benefit is payable under Part II of the Health Insurance Act 1973; or

(b)

...

The payments to the doctor and hospital are payments to a 'legally qualified medical practitioner' or a 'public or private hospital'. As such the expenses will only be ineligible medical expenses if the service performed was a cosmetic operation.

In determining whether an operation is 'cosmetic' the Commissioner must consider the ordinary meaning of the word (paragraph 4.18 of the Explanatory Memorandum to the Tax Laws Amendment (2005 Measures No 6) Bill 2005 (the EM)).

Paragraph 4.19 of the EM refers to the following definition of cosmetic in The Macquarie Dictionary:

•

serving to beautify; imparting or improving beauty, especially of the complexion; or

•

designed to effect superficial alteration while keeping the basis unchanged.

In order for this definition of cosmetic to be satisfied, it is sufficient that either part of the definition is met.

In relation to the second part of the above definition, the operation is merely superficial and does not change the basis. The 'basis' in this situation is the ability to speak. The operation on their vocal cords has only superficially changed the tone of the taxpayer's voice. It has had no effect on the basis, that is, the taxpayer had the ability to speak both before and after the operation.

As the operation was designed to effect a superficial alteration to the taxpayer's voice whilst keeping the basis unchanged, it is cosmetic.

In view of the above, the operation is a cosmetic operation and, as the taxpayer is not entitled to a medicare benefit under Part II of the Health Insurance Act 1973, the expenses are ineligible medical expenses for the purposes of subsection 159P(4) of the ITAA 1936.

Year of income:  Year ended 30 June 2006

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

Other References:
Explanatory Memorandum Tax Laws Amendment (2005 Measures No 6) Bill 2005
The Macquarie Dictionary, 2001, rev. 3rd edn, The Macquarie Library Pty Ltd, NSW.

Keywords
Medical expenses
Medical expenses rebates

Business Line:  Small Business/Individual Taxpayers

Date of publication:  20 April 2007

ISSN: 1445-2782