Issue
Are the costs of registering and obtaining compulsory third party (CTP) insurance over an electric scooter, that has been prescribed by a medical practitioner for aid in mobilisation, 'medical expenses' as defined in subsection 159P(4) of the Income Tax Assessment Act 1936 (ITAA 1936)?
Decision
Yes. The costs of registering and obtaining CTP insurance over an electric scooter, that has been prescribed by a medical practitioner for aid in mobilisation, are 'medical expenses' as defined in subsection 159P(4) of the ITAA 1936.
Facts
The taxpayer has difficulty in mobilising and has purchased an electric scooter to aid in mobilisation. The scooter is of a kind specifically designed for the disabled. The taxpayer has had the scooter registered with the relevant transport authority for on-road use. The taxpayer also obtained CTP insurance over the scooter.
The use of an electric scooter was prescribed by a legally qualified medical practitioner.
Reasons for Decision
Paragraph (f) of the definition of 'medical expenses' in subsection 159P(4) of the ITAA 1936 includes payments made in respect of a medical or surgical appliance prescribed by a legally qualified medical practitioner.
Taxation Ruling TR 93/34 explains the meaning of a 'medical or surgical appliance' as being an instrument, apparatus or device which is manufactured, distributed or generally recognised as an aid to the function or capacity of a person with a disability or an illness.
The electric scooter is therefore a medical appliance as it has been manufactured as, and is generally recognised as, an aid to those people who have a mobility impairment.
As the electric scooter is a medical or surgical appliance prescribed by a legally qualified medical practitioner, payments that are 'in respect of' the scooter will meet the definition of 'medical expenses'.
The courts have commented on the phrase 'in respect of' at various times and have found it to have a very wide meaning. Per Mann CJ in Trustees Executors & Agency Co. Ltd. v. Reilly [1941] VLR 110; [1941] ALR 105: The words 'in respect of' are difficult of definition but they have the widest possible meaning of any expression intended to convey some connection or relation between the subject matters to which the words refer.
In a Board of Review decision ( Case F25 74 ATC 130; (1974) 19 CTBR (NS) 288 Case 43 ) it was held that the phrase 'in respect of' was wide enough to cover maintenance and repair costs as well as the original cost of purchasing the medical or surgical appliance.
It is considered that the costs of registering the scooter for on-road use and obtaining CTP insurance over the scooter are maintenance costs. This is because registering and obtaining CTP insurance over the scooter are ongoing costs which are necessary to bring the scooter into a condition in which it can be legally used as it was designed to be, as an aid to mobility.
Therefore, it is considered that the costs of registering and obtaining CTP insurance over the electric scooter are 'medical expenses' as defined in subsection 159P(4) of the ITAA 1936. As such these costs can be added to the purchase price of the scooter, and all other medical expenses incurred during the income year, for the purpose of calculating the medical expenses tax offset in section 159P of the ITAA 1936.