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

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?

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.

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.

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.

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 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.