Issue
Is the taxpayer entitled to a Private Health Insurance tax offset under section 61-335 of the Income Tax Assessment Act 1997 (ITAA 1997) for premiums paid to a health fund not registered in Australia?
Decision
No, the taxpayer is not entitled to a Private Health Insurance tax offset under section 61-335 of the ITAA 1997 for premiums paid to a health fund not registered in Australia.
Facts
The taxpayer has private health insurance with an overseas health fund that reimburses the taxpayer for medical expenses in Australia.
The fund has direct agreements with several Australian hospitals and provides coverage equivalent to combined hospital and ancillary cover. The fund is not a registered health fund in Australia. The taxpayer is required to pay monthly premiums and is not entitled to claim any Medicare benefits.
Reasons for Decision
Under section 61-335 of the ITAA 1997 a tax offset will be allowed for private health insurance premiums provided two conditions are met: (1) the premium must be 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) (2) the premium must be paid in the same income year that it is claimed as a tax offset.
An 'appropriate private health insurance policy' under section 20-5 of the PHIIA 1998, is a 'private health insurance policy' that provides hospital, ancillary or combined cover where every person covered by the policy is eligible to claim benefits under the Medicare system.
A 'private health insurance policy' is a contract of insurance entered into by a registered organisation in the course of carrying on a health insurance business as defined by the National Health Act 1953 (the Health Act).
In accordance with section 73 of Part VI of the Health Act, the Private Health Insurance Administrative Council (PHIAC) keeps a list of health funds classed as registered organisations. No overseas funds are listed by PHIAC as registered organisations.
As the overseas fund is not a registered organisation and the taxpayer is not eligible to claim benefits under the Medicare system, any premiums paid to an overseas fund are not premiums paid in respect of an 'appropriate private health insurance policy'. Therefore the taxpayer has no entitlement to a Private Health Insurance tax offset under section 61-335 of the ITAA 1997.