ATO Interpretative Decision

ATO ID 2001/721 (Withdrawn)

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• This ATO ID is withdrawn because it contains a view in respect of a provision of the Income Tax Assessment Act 1936 that does not apply after the 2014-15 year of income.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

Is the cost of laser eye surgery a medical expense for the purposes of the medical expenses tax offset under section 159P of the Income Tax Assessment Act 1936 (ITAA 1936)?

Decision

Yes. The cost of laser eye surgery is a medical expense for the purposes of the medical expenses tax offset under section 159P of the ITAA 1936.

Facts

The taxpayer suffers from an eye disorder.

The taxpayer underwent corrective laser eye surgery.

The surgery was carried out at a laser eye centre by a specialist qualified medical practitioner.

The taxpayer incurred costs in paying the fees of the medical practitioner.

Reasons for Decision

Subsection 159P(3A) and subsection 159P(3AA) of the ITAA 1936 provide that a tax offset is allowable to a taxpayer whose net medical expenses in the year of income exceed the taxpayer's specified phase-in limit.

Medical expenses are defined in subsection 159P(4) of the ITAA 1936. Paragraph (a) of the definition includes payments made to a legally qualified medical practitioner in respect of an illness or operation.

The term 'illness' is not defined in the ITAA 1936 and therefore it is necessary to look at the ordinary meaning of the term. An illness includes a sickness, disease, or disorder of the body or the mind and involves a deviation from the normal healthy state. An 'illness' would include eye disorders in the nature of short sightedness, long sightedness or a stigma.

The term 'operation' is not defined in the ITAA 1936 and therefore it is again necessary to look at the ordinary meaning of the term. An 'operation' in a medical sense means an act or series of acts performed on the body of a patient for their relief or to restore them to a normal condition. It involves the use of surgical instruments as distinguished from therapeutic treatment.

It is accepted that the laser is a surgical instrument.

The taxpayer has a disorder of the eye which qualifies as an illness. The laser surgery is accepted as being an operation performed in order to correct or improve the taxpayer's condition. The expenses paid to the legally qualified medical practitioner in relation to laser eye surgery qualify as 'medical expenses' for the purposes of the medical expenses tax offset under subsection 159P(4) of the ITAA 1936. Therefore, these expenses can be taken into account when determining the taxpayer's entitlement to the medical expenses tax offset.

Amendment History

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

Keywords
Medical expenses
Medical expenses rebates

Business Line:  Small Business/Individual Taxpayers

Date of publication:  30 November 2001

ISSN: 1445-2782