ATO ID 2001/36: Deductions and expenses: travel expenses in relation to medical treatment
Date of decision: 19 August 1998
Business line: Individual Taxpayers

Issue
Whether a taxpayer in receipt of a disability pension is entitled to claim a deduction under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) for travel expenses incurred in order to obtain medical treatment?

Decision
The travel expenses are of a private nature and, as such, are not deductible under section 8-1 of the ITAA 1997.

Facts
The taxpayer is in receipt of a disability pension and suffers from a medical condition. As a result of this condition, the taxpayer is severely restricted in the ability to move about freely in public places, especially without an escort or companion. The taxpayer has also developed other medical conditions which are related to age. The taxpayer is required to make monthly visits to a general hospital and because of the condition the taxpayer finds it necessary to travel in the secure environment of a taxi to make these regular visits for medical treatment. The disability pension is paid to the taxpayer regardless of whether the taxpayer visits the hospital on a monthly basis.

Reasons for decision
Summary: The travel expenditure incurred by the taxpayer in travelling to and from the taxpayer's residence to the hospital for medical treatment is not relevant or incidental to the earning or receipt of the disability pension income, but rather these expenses are of a private nature. To be deductible under section 8-1 of the ITAA 1997, the expenditure must be incurred in gaining or producing the assessable income, but expenditure which is essentially of a private nature is not deductible. It is a long standing principle that a taxpayer does not satisfy section 8-1 of the ITAA 1997 merely by demonstrating some causal connection between the expenditure and the derivation of income. What must be shown is a closer and more immediate connection. The expenditure must be incurred 'in the course of' gaining or producing the assessable income ( Lunney v. Commissioner of Taxation, Hayley v. FC of T (1958) 100 CLR 478; [1958] HCA 5; (1958) 11 ATD 404; (1958) 7 AITR 166). These principles have been affirmed by the High Court in Commissioner of Taxation v. Payne (2001) 202 CLR 93; [2001] HCA 3; 2001 ATC 4027; (2001) 46 ATR 188. As the taxpayer is not able to establish the requisite connection between travel to the hospital and receipt of the disability pension, and expenses incurred in obtaining medical treatment are considered to be private in nature, the travel expenses are not deductible under section 8-1 of the ITAA 1997

Legislative references: Income Tax Assessment Act 1997 section 8-1
Case references: Commissioner of Taxation v Payne (2001) 202 CLR 93 [2001] HCA 3 2001 ATC 4027 (2001) 46 ATR 188
Related ATO interpretative decisions: ATO ID 2012/73
Subject references: Domestic travel expenses Medical expenses rebates Travel expenses