Finance Act, 1955

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Relief in respect of payments for insurance against expenses of sickness.

4.—(1) If an individual makes a claim in that behalf in the manner prescribed by the Income Tax Acts, makes a return in the prescribed form of the total income of the individual and proves that, in the year preceding the year of assessment, the individual, or, if the individual is a married man, his wife, has made a payment to an authorised insurer under a contract of insurance which provides specifically, whether in conjunction with other benefits or not, for the reimbursement or discharge, in whole or in part, of actual medical, surgical or nursing expenses (including the cost of maintenance at a hospital, nursing home or sanatorium) resulting from sickness of or accident to the individual or the spouse of the individual or children or other dependants of the individual or of the spouse of the individual, then—

(a) where the payment covers no benefits other than such reimbursement or discharge, the full amount of the payment shall be deducted from or set off against any income for the year of assessment of the individual, if the individual made the payment, or of the wife of the individual, if she made the payment, and

(b) where the payment covers benefits other than such reimbursement or discharge, a like relief shall be granted in respect of so much of the payment as is referable to such reimbursement or discharge,

and tax shall, where necessary, be discharged or repaid accordingly and the total income of the individual for the year of assessment shall be calculated accordingly for all the purposes of the Income Tax Acts.

(2) Where an amount for deduction from or set off against income of one of the spouses is ascertained in accordance with subsection (1) of this section, then—

(a) if there is no income of the spouse for the year of assessment in relation to which relief under the said subsection can be given, the relief may be given in relation to income of the other spouse for that year, and

(b) if the amount ascertained as aforesaid exceeds the income of the spouse for the year of assessment, the excess may be deducted from or set off against any income of the other spouse for that year.

(3) Where relief is given under this section, no relief or deduction under any other provision of the Income Tax Acts shall be given or allowed in respect of the payment or part of a payment (as the case may be).

(4) All such provisions of the Income Tax Acts as apply in relation to allowances or deductions within the meaning of the Third Schedule to the Finance Act, 1920 , shall, with any necessary modifications, apply in relation to relief under this section.

(5) In this section—

“authorised insurer” means any person lawfully carrying on in the State such business of insurance as is referred to in subsection (1) of this section;

“total income” means total income from all sources as estimated in accordance with the provisions of the Income Tax Acts.