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Is the taxpayer entitled to the private health insurance tax offset under subsection 61-335(1) of the Income Tax Assessment Act 1997 ( ITAA 1997) for the taxation period in which the taxpayer was not living in Australia?

No. The taxpayer is not entitled to the private health insurance tax offset under subsection 61-335(1) of the ITAA 1997 during the taxation period that the taxpayer was not living in Australia.

The taxpayer and their family were not living in Australia during the income year.

The taxpayer had continued to pay private health insurance premiums to an Australian health insurance fund during the period they were overseas to cover themselves and their family.

The taxpayer had not claimed a reduction in private health insurance premiums through the private health fund for this period. Neither the taxpayer, nor any member of their family, were diplomatic or consular staff.

Section 61-335 of the ITAA 1997 provides a tax offset in respect of private health insurance premiums where: • The premium was paid by the taxpayer or their employer in respect of an 'appropriate private health insurance policy' as defined in the Private Health Insurance Incentives Act 1998 (PHIIA 1998) • The premium was paid in the same income year that it is claimed as a tax offset, and • The taxpayer has not received a reduction in their private health insurance premiums in respect of the tax offset.

Section 20-5 of the PHIIA 1998 provides that an 'appropriate private health insurance policy' means a private health insurance policy that satisfies the following conditions: • It provides hospital cover, ancillary cover or combined cover, and • The person, or each of the persons covered by it is an 'eligible person' with the meaning of section 3 of the Health Insurance Act 1973 (HIA 1973), or is treated as such because of section 6 or 7 of that Act.

Further, under section 3 of the HIA 1973, an 'eligible person' means a person that is an: • Australian resident,or • 'eligible overseas representative'.

Section 3 of the HIA 1973 defines an 'eligible overseas representative' to mean diplomatic or consular staff and their families or persons declared by the Minister to be treated as eligible persons. The taxpayer is not an eligible overseas representative.

Therefore, it is necessary to determine whether the taxpayer is an 'Australian resident' for the purposes of the HIA 1973.

Under section 3 of the HIA 1973, an 'Australian resident' means a person who resides in Australia and meets one of a number of other criteria.

The taxpayer was not residing in Australia, within the ordinary meaning of those words, during the income year. Therefore the taxpayer is not considered to be an 'Australian resident' for the purposes of the HIA 1973 and is therefore not an 'eligible person' for the purposes of that Act.

As one or more of the persons covered by the health insurance policy is not an 'eligible person', the policy is not an 'appropriate health insurance policy' under the PHIIA 1998. Therefore the taxpayer has failed to meet one of the conditions for eligibility for the tax offset (subsection 61-335(2) of the ITAA 1997).

Accordingly the taxpayer is not entitled to the private health insurance tax offset under subsection 61-335(1) of the ITAA 1997.