ATO Interpretative Decision
ATO ID 2007/190 (Withdrawn)
Income Tax
Medical expenses: tax offset - payments for domestic servicesFOI status: may be released
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This ATO ID has been withdrawn as it does not accurately reflect the ATO View. The application of the medical expenses tax offset, where an attendant of a person who is blind or confined to a bed or invalid chair provides a domestic service, will depend on the facts. The expense of having the service provided must be capable of being characterised as a medical expense.This document has changed over time. View its history.
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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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
Do payments for the provision of domestic services qualify as medical expenses for the purposes of the medical expenses tax offset under section 159P of the Income Tax Assessment Act 1936 (ITAA 1936)?
Decision
No. Payments for domestic services do not qualify as medical expenses for the purposes of the medical expenses tax offset under section 159P of the ITAA 1936.
Facts
The taxpayer's spouse is an Australian resident and is ill and visually impaired.
The taxpayer pays an entity for the provision of some domestic services. These services enable the taxpayer and the taxpayer's spouse to continue living at home.
The domestic services provided are house cleaning, home and garden maintenance.
Reasons for Decision
A medical expense tax offset is available to a taxpayer under section 159P of the ITAA 1936 where the taxpayer pays medical expenses for themselves or a dependant who is an Australian resident.
Paragraph (h) of the definition of the term 'medical expenses' in subsection 159P(4) of the ITAA 1936 describes medical expenses 'as remuneration of a person for services rendered by him as an attendant of a person who is blind or permanently confined to a bed or an invalid chair'.
The term 'attendant' is not defined in the ITAA 1936 or the Income Tax Assessment Act 1997 (ITAA 1997). Accordingly, it will have its ordinary meaning, having regard to the purpose and context of the provisions in which it appears: Chaudhri v. Federal Commissioner of Taxation [2001] FCA 554; 2001 ATC 4214; (2001) 47 ATR 126. The Macquarie Dictionary, 2005, 4th edition, The Macquarie Library Pty Ltd., (NSW), relevantly defines an attendant 'as someone who provides personal support and physical assistance for a person with a physical disability'.
In this context, the requirement that the services be provided 'as an attendant' of a person necessitates that the services are primarily to support and assist the person, who is blind or permanently confined to a bed or an invalid chair, while they perform functions that they can with that support and assistance. The phrase 'as an attendant' in subparagraph (h) defines the relevant services as those necessitated by or founded in the disability: that is, not just services rendered to the person with a disability but services rendered to the person because they are disabled.
Payments for services that are domestic services (such as house cleaning, home and garden maintenance services) fall outside the scope of paragraph 159P(4)(h) of the ITAA 1936 when the services cannot also be said to be rendered to a permanently confined taxpayer as services that address the permanently confined taxpayer's disability.
The services that fall within paragraph 159P(4)(h) of the ITAA 1936 are first rendered by an attendant - in guiding and assisting the disabled person in doing what the disabled person is doing (that is, in this case, doing the house cleaning, home and garden maintenance) - and second are necessitated by the disability of the person who is thereby supported or assisted.
The taxpayer pays an entity for house cleaning, home and garden maintenance services to be carried out. The persons carrying out the domestic services do not support or assist the taxpayer's spouse to perform those activities.
Accordingly, the payments made by the taxpayer to the entity in respect of the provision of domestic services do not qualify as payments of medical expenses for the purposes of the medical expenses tax offset under section 159P of the ITAA 1936.
Year of income: Year ended 30 June 2003 Year ended 30 June 2004
Legislative References:
Income Tax Assessment Act 1936
section 159P
subsection 159P(4)
Case References:
Chaudhri v. Federal Commissioner of Taxation
[2001] FCA 554
2001 ATC 4214
(2001) 47 ATR 126
ATO ID 2002/934
ATO ID 2007/189 ATO Interpretative Decisions overturned by this decision
ATO ID 2003/319
Keywords
Medical expenses
Medical expenses rebate
Private or domestic expenses
ISSN: 1445-2782
| Date: | Version: | |
| 3 July 2007 | Original statement | |
| You are here | 15 October 2010 | Archived |