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ATO Interpretative Decision

ATO ID 2002/770 (Withdrawn)

Income Tax
Medical expenses tax offset - portion of medical expense paid in year of income

Attention This ATO ID is withdrawn.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.

Status of this decision: Decision withdrawn 11 August 2017.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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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.


Issue

Is the total amount incurred on medical expenses used to calculate the taxpayer's entitlement to the medical expenses tax offset (also referred to as a rebate) under section 159P of the Income Tax Assessment Act 1936 (ITAA 1936) where those expenses were paid in instalments over more than one year of income?

Decision

No. Where medical expenses have been paid in instalments over more than one year of income only the actual amount paid in a particular year of income can be used to calculate the taxpayer's entitlement to the medical expenses tax offset under section 159P of the ITAA 1936 for that income year.

Facts

The taxpayer incurred medical expenses during the year of income.

The taxpayer paid a portion of the expenses in the current income year and the remainder was paid in the following income year.

Reasons for Decision

Subsection 159P(1) of the ITAA 1936 provides that an amount paid by a taxpayer in the year of income as medical expenses (reduced by any entitlement to reimbursement from a health fund or government authority) for themselves or a resident dependant, is treated as a rebatable amount.

If the rebatable amount exceeds the threshold dollar amount specified in the legislation in the year of income, the taxpayer is entitled to a medical expenses tax offset of 20% or 10% of the excess over the threshold amount.

Subsection 159P(1) of the ITAA 1936 specifically states that the amount of medical expenses must be paid to be treated as a rebatable amount.

Although the taxpayer has incurred the medical expenses during the year of income, the taxpayer has only paid a portion of those expenses. Consequently, the taxpayer can only use the portion of those medical expenses actually paid for the purposes of calculating their entitlement to the medical expenses tax offset under section 159P of the ITAA 1936.

Note: the balance of unpaid medical expenses will be treated as a rebatable amount for the purposes of the medical expenses tax offset in the year(s) of income that they are actually paid. From 1 July 2015 the tax offset is only available for medical expenses relating to disability aids, attendant care or aged care. The offset is being phased out and will not be available after 30 June 2019.

Amendment History

Date of Amendment Part Comment
8 January 2016 Issue, Facts Amended to reflect legislative changes.
  Reasons for Decision Updated reference to the amount of the offset available. Added note about phasing out of medical expenses tax offset.

Date of decision: 3 May 2002

Year of income:Year ended 30 June 2001
 Year ending 30 June 2002

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

Siebel/TDMS Reference Number: DW449778; 1-7JMC1FU;1-8EB054D

Business Line: Small Business/Individual Taxpayers

Date of publication: 31 July 2002

ISSN: 1445-2782

ATO ID 2002/770 (Withdrawn) history   Top  
   Date   Version 
    3 May 2002   Original statement   
    8 January 2016   Updated statement   
 You are here ®  11 August 2017   Withdrawn   


 


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