Private ruling: Private health insurance tax offset
Published: June 2015
Ruling period: Year ended 30 June X | Year ended 30 June Y | Year ending 30 June Z
Date scheme commenced: 1 July Z

Ruling: Q1: Are you entitled to a private health insurance tax offset for the years ended 30 June X, 30 June Y and 30 June Z? | A1: No.

Relevant facts and circumstances: You were insured with an insurer. You held an insurance policy which included hospital health cover. You have made hospital and other claims on this policy over the years. Your insurer advised that due to government legislative requirements, this policy must be cancelled. You commenced private health insurance cover with a new insurer. The new premiums have attracted a Lifetime Health Cover Loading as the new insurer does not recognise your previous policy as being appropriate private health insurance. The Department of Health advise that the policy issued to you by the previous insurer did not qualify as applicable benefits arrangements as the previous insurer not a registered organisation.

Relevant legislative provisions: Income Tax Assessment Act 1997 Subdivision 61-G | Medicare Levy Act 1986 Subsection 3(5) | Medicare Levy Act 1986 Subsection 3(6) | Medicare Levy Act 1986 Section 8B | Medicare Levy Act 1986 Section 8C | Medicare Levy Act 1986 Section 8D

Reasons for decision: Summary: Subdivision 61-G of the Income Tax Assessment Act 1997 states you are entitled to a private health insurance tax offset (PHITO) for an income year if: • a premium was paid by the individual under a complying private health insurance policy (within the meaning of the Private Health Insurance Act 2007 ) • the premium was paid during the income year • each person insured under the complying health insurance policy during the period covered by the premium is, for the whole of the time he or she is insured under the policy during that period, an eligible person for Medicare benefits, and • you did not receive a premium reduction or an incentive payment under the Private Health Insurance Act 2007 [PHIA]. A complying health insurance policy is defined in the ITAA 1997 as having the same meaning as in the PHIA. Section 63-10 of the PHIA states a complying health insurance policy is an insurance policy that meets: (a) the community rating requirements in Division 66; and (b) the coverage requirements in Division 69; and (c) if the policy covers hospital treatment - the benefit requirements in Division 72; and (d) the waiting period requirements in Division 75; and (e) the portability requirements in Division 78; and (f) the quality assurance requirements in Division 81; and (g) any requirements set out in the Private Health Insurance (Complying Product) Rules for the purposes of this paragraph. Chapter 4 of the PHIA states that only registered entities are permitted to carry on a health insurance business and sell health insurance policies. As your previous insurer was not a registered entity any policy issued by them is not a complying health insurance policy for the purposes of the PHITO. Therefore, you are not entitled to a tax offset in relation to the policy issued by your previous insurer for the years ended 30 June X to 30 June Z, inclusive.