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ATO Interpretative Decision

ATO ID 2002/275 (Withdrawn)

Income Tax
Medical expenses tax offset - reimbursements from an overseas health insurance fund

Attention This ATO ID is withdrawn. Guidance on the Net Medical Expenses Tax Offset can be found at Medical expenses on the ATO website (QC 31918).
Attention This document has changed over time. View its history.
FOI status: may be released
Status of this decision: Decision withdrawn 11 August 2017.

CautionCAUTION: This is an edited and summarised record of a Tax Office decision. This record is not published as a form of advice. It is being made available for your inspection to meet FOI requirements, because it may be used by an officer in making another decision.

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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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.


Is a taxpayer required to reduce their medical expenses by reimbursements received for those expenses from an overseas health insurance fund when calculating their entitlement to a medical expense tax offset under section 159P of the Income Tax Assessment Act 1936 (ITAA 1936)?


Yes. For medical expense tax offset purposes, an overseas health insurance fund is a fund, society or association whose payments reduce the amount of medical expenses available for the tax offset.


The taxpayer is a member of an overseas health insurance fund.

The fund is based overseas and is not a registered fund for the purposes of claiming a private health insurance tax offset. Furthermore, the fund does not provide the hospital cover required to avoid paying the Medicare levy surcharge.

The overseas health insurance fund partially reimbursed the taxpayer for the medical expenses incurred.

Reasons for Decision

Subsection 159P(3A) of the ITAA 1936 provides that a taxpayer is entitled to a rebate of tax (tax offset) in respect of rebatable medical expense amounts applicable to the taxpayer in respect of the year.

A rebatable medical expense amount is the amount of medical expenses incurred in respect of the taxpayer or a resident dependant of the taxpayer net of any amount recovered.

Subsection 159P(1) of the ITAA 1936 provides that any amount which the taxpayer or any other person is entitled to be paid by a government or public authority, or a society, association or fund must reduce the amount of the medical expenses for the purposes of calculating the tax offset.

Subsection 159P(1) of the ITAA 1936, does not require that the authority, society, association or fund be a resident of Australia.

The taxpayer incurred medical expenses and was entitled to reimbursement from an overseas health insurance fund. The taxpayer is required to reduce the amount of the medical expenses by the reimbursement for the purposes of calculating their entitlement to the medical expense tax offset under section 159P of the ITAA 1936.

Amendment History

Date of Amendment Part Comment
17 October 2014 Note Amend to alert to changes in NMETO from 1 July 2012
  Facts Remove reference to old threshold amount
  Reasons for Decision Amend explanation to generic terms for clarity
6 March 2010 Title Convert to lower case
  Reasons for Decision Update terminology to 'tax offset'; adjust text to allow for changes in threshold amount

Date of decision: 6 February 2002

Year of income:Year ended 30 June 2001

Legislative References:
Income Tax Assessment Act 1936
   section 159P
   subsection 159P(1)

Medical expenses
Medical expenses rebates

Siebel/TDMS Reference Number: DW365536, 1-5PJ3E3A;1-8EB04WL

Business Line: Small Business/Individual Taxpayers

Date of publication: 22 March 2002

ISSN: 1445-2782

ATO ID 2002/275 (Withdrawn) history   Top  
   Date   Version 
    6 February 2002   Original statement   
   17 October 2014   Updated statement   
 You are here ®  11 August 2017   Withdrawn   


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