Draft Taxation Determination

TD 93/D167

Income tax: is a rebate allowable under section 159P of the Income Tax Assessment Act 1936 (ITAA) on the medical expenses paid by the employee although reimbursed, in whole or in part, by the employer?

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FOI status:

draft only - for comment

Preamble

1 Yes. A rebate of tax is allowable under subsection 159P(3A). The rebate is an amount equal to 20% of the rebatable amount, or an aggregate of the rebatable amounts, exceeding $1000 in the year of income.

2 Medical expenses, 'paid' by an employee in the year of income in respect of himself or of a resident 'dependant' (see subsection 159P(4) of the ITAA), although reimbursed by an employer are rebatable amounts in total.

3 The amount of medical expenses 'paid' is not reduced by the reimbursement by the employer to arrive at the rebatable amount because the taxpayer's medical expenses are not recouped or recoupable from a government or public authority or by a society, association or fund.

4 If the employer pays the employee's medical expenses directly to the doctor rather than reimbursing the employee, such expenses are not considered to have been 'paid' by the employee. The employee cannot therefore claim them as rebatable amounts.

5 In either case, from 1 July 1986 the payment or reimbursement by the employer is a benefit under section 20 of the Fringe Benefits Tax Assessment Act 1986.

Commissioner of Taxation
24/6/93

References

BO UMG 0038

Related Rulings/Determinations:

TD 93/D167W

Subject References:
employee benefits
fringe benefits tax
medical expenses
medical expenses rebate

Legislative References:
ITAA 159P
FBTAA 20