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ATO Interpretative Decision

ATO ID 2002/975 (Withdrawn)

Income Tax
Private health insurance tax offset - premiums paid by taxpayer not covered by the complying health insurance policy

Attention This ATO ID is withdrawn. Guidance can be found at Completing your tax return (QC 49967).
Attention This document has changed over time. View its history.
FOI status: may be released
Status of this decision: Decision withdrawn 23 February 2018.

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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 taxpayer entitled to a private health insurance tax offset under subsection 61-205(1) of the Income Tax Assessment Act 1997 (ITAA 1997) for premiums paid under a complying health insurance policy which does not cover the taxpayer?

Decision

Yes. The taxpayer is entitled to a private health insurance tax offset under subsection 61-205(1) of the ITAA 1997 for premiums paid under a complying health insurance policy which does not cover the taxpayer.

Facts

The taxpayer paid premiums for a complying health insurance policy which provides the taxpayer's children with private health insurance.

The taxpayer is not covered by the complying health insurance policy.

The complying health insurance policy provides hospital treatment, general treatment or combined cover to the taxpayer's children who are all Australian residents.

Reasons for Decision

Under subsection 61-205(1) of the ITAA 1997 a tax offset will be allowed for private health insurance premiums provided three conditions are met:

·
 a premium, or an amount in respect of a premium, was paid by you or another entity during the income year under a complying health insurance policy in respect of a period (the premium period); and
·
 you are a 'Private Health Insurance Incentive Beneficiary' (PHIIB) in respect of the premium or amount; and
·
 each person insured under the policy during the premium period is, for the whole of the time that he or she is insured under the policy during the premium period:
·
 an eligible person (within the meaning of section 3 of the Health Insurance Act 1973 ); or
·
 treated as such because of section 6, 6A or 7 of that Act.

An 'eligible person' includes an Australian resident.

A 'complying health insurance policy' is one which meets the requirements of section 63-10 of the Private Health Insurance Act 2007 (PHIA 2007). The 'complying health insurance policy' must provide hospital treatment, general treatment or combined cover.

There is no requirement under subsection 61-205(1) of the ITAA 1997 that the private health insurance policy must cover the person paying the premium in order for them to be entitled to the private health insurance tax offset. However, the person or entity is required to be a PHIIB.

In accordance with section 22-5 of the PHIA 2007, where the only person or persons insured under a complying health insurance policy throughout the premium period is a dependent child or dependent children, each person who is a parent (within the meaning of Part 2.11 of the Social Security Act 1991 ) in relation to one or more of those dependent children on the last day of the financial year is a PHIIB in respect of the premium or amount, unless the parents are not 'married' to each other within the meaning of the A New Tax System (Medicare Levy Surcharge--Fringe Benefits) Act 1999 at the end of the financial year. Where the parents are not 'married' to each other at the end of the financial year, only the parent who pays the premium or amount is a PHIIB, provided the person who pays the premium or amount is not a dependent child.

The taxpayer is a parent paying premiums for a complying health insurance policy which provides their children with private health insurance, and the taxpayer is not a dependent child. The children are all eligible persons during the premium period, being Australian residents.

Therefore, the taxpayer is entitled to a private health insurance tax offset under subsection 61-205(1) of the ITAA 1997 for premiums paid under a private health insurance policy which does not cover the taxpayer.

Amendment History

Date of Amendment Part Comment
8 April 2016 Issue and Decision Change legislative reference to subsection 61-205(1) of ITAA 1997. Remove reference to section 61-335.
Changed wording of 'private' to 'complying' health insurance policy in accordance with changes in legislation.
  Facts Changed wording of 'private' to 'complying'.
Change in wording; 'ancillary' cover now referred to as 'general treatment' to align with legislative change.
  Reason for Decision Change legislative reference to subsection 61-205(1) of ITAA 1997.
Changed wording of 'private' to 'complying'.
Define a 'PHIIB' in accordance with the Private Health Insurance Act 2007 (PHIA 2007).
Include reference to Health Insurance Act 1973 , Social Security Act 1991 and A New Tax System (Medicare Levy Surcharge--Fringe Benefits) Act 1999. Remove reference to National Health Act 1953 and Private Health Insurance Incentives Act 1998.
  Legislative reference Change legislative reference to subsection 61-205(1) of ITAA 1997.
Include reference to PHIA 2007, Health Insurance Act 1973 , Social Security Act 1991 and A New Tax System (Medicare Levy Surcharge--Fringe Benefits) Act 1999. Remove reference to National Health Act 1953 and Private Health Insurance Incentives Act 1998.

Date of decision: 23 May 2002

Year of income:Year ending 30 June 2002
 Year ending 30 June 2003
 Year ending 30 June 2004

Legislative References:
A New Tax System (Medicare Levy Surcharge--Fringe Benefits) Act 1999
   section 7

Health Insurance Act 1973
   section 3
   section 6
   section 6A
   section 7

Income Tax Assessment Act 1997
   subsection 61-205(1)

Private Health Insurance Act 2007
   section 22-5
   section 63-10

Social Security Act 1991
   Part 2.11

Keywords
30% Private Health Insurance Rebate
Private health funds
Private health insurance offsets

Business Line: Small Business/Individual Taxpayers

Date of publication: 18 October 2002

ISSN: 1445-2782

ATO ID 2002/975 (Withdrawn) history   Top  
   Date   Version 
   23 May 2002   Original statement   
    8 April 2016   Updated statement   
 You are here ®  23 February 2018   Withdrawn   


 


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