ATO ID 2002/775: Deductibility of vaccination expenses - sole trader
Date of decision: 12 June 2002
Year of income: Year ending 30 June 2002
Business line: Small Business/Individual Taxpayers

Issue
Is a sole trader or employer entitled to a deduction under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) for medical expenses incurred to vaccinate against Q fever, which is a well recognised occupational hazard in the cattle industry?

Decision
Yes. The medical expenses are necessarily incurred in carrying on a business for the purpose of gaining assessable income and are, therefore, deductible in accordance with paragraph 8-1(1)(b) of the ITAA 1997.

Facts
The individual operates a business as a sole trader or employer. As a direct consequence of carrying on that business, the individual is regularly exposed to cattle that may be infected with Q fever. Q fever is a well recognised occupational hazard within the cattle industry. As a result of the probability of coming into direct contact with potentially infected animals, the taxpayer incurred medical expenses to vaccinate against Q fever.

Reasons for decision
Summary: Paragraph 8-1(1)(b) of the ITAA 1997 allows an individual to deduct from his or her assessable income any loss or outgoing to the extent that it is necessarily incurred in carrying on a business for the purpose of gaining or producing assessable income. However, the loss or outgoing is not deductible if it is of capital, private or domestic nature. Generally, a deduction is not allowable for the cost of vaccinations to protect against infectious diseases in the work place as this is a personal medical expense and, therefore, of a private nature (see Taxation Ruling TR 95/8 Income Tax : employee cleaners - allowances, reimbursements and work-related deductions ). However, in this particular case, the disease being vaccinated against is not one which affects the general community but is restricted to persons who come into close contact with cattle. In Mansfield v. FC of T 96 ATC 4001; (1995) 31 ATR 367 the Federal Court of Australia decided that expenses of a private or personal nature may be an allowable deduction where the working environment is sufficiently abnormal and unique as to make the essential character of the expenditure work-related rather than private in nature. However, whether such an expense is either private or work-related involves questions of fact and degree, and something out of the ordinary is usually necessary for the essential character of the expenditure to be seen as work-related (see Taxation Ruling TR 2003/16 Income Tax : deductibility of protective items ). In this particular case, it is considered that exposure to Q fever is an incident of working within the cattle industry rather than a more general risk to the public. Therefore, any medical expenses incurred to vaccinate against the risk of contracting Q fever by a sole trader or employer, who carries on a business which involves direct contact with cattle, are regarded as arising from the carrying on of that business. Consequently, the medical expenses are of a business nature and an allowable deduction in accordance with paragraph 8-1(1)(b) of the ITAA 1997.

Legislative references: Income Tax Assessment Act 1997 section 8-1
Case references: Mansfield v. FC of T 96 ATC 4001 31 ATR 367
Related public rulings and determinations: Taxation Ruling TR 95/8 | Taxation Ruling TR 2003/16
Subject references: Deductions & expenses Medical expenses Occupational health & safety expenses Sole traders