Private ruling: Work related expense
Published: November 2011
Ruling period: Year ending 30 June 2012
Date scheme commenced: 1 July 2011

Ruling: Q1: Can you claim a deduction for part of the cost of your tinted prescription lenses used to enable you to work in outdoor conditions under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997)? | A1: No. | Q2: Can you claim a deduction for part of the cost of your tinted prescription lenses used to enable you to work in outdoor conditions under section 40-25 of the ITAA 1997? | A2: Yes

Relevant facts and circumstances: This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling. You spend most of your working days outdoors. You are affected by the glare of the sun and are about to purchase (at a cost of $XXX) tinted prescription multi focal lenses to lower the glare factor.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 8-1 Income Tax Assessment Act 1997 section 40-25

Reasons for decision: Summary: Section 8-1 of the ITAA 1997 allows a deduction for all losses and outgoings to the extent to which they are incurred in gaining or producing assessable income except where the outgoings are of a capital, private or domestic nature, or relate to the earning of exempt income. In the case of some capital assets used in earning income, section 40-25 of the ITAA 1997 allows a taxpayer to deduct an amount equal to the decline in value for an income year of a depreciating asset that they held for any time during that year. Under subsection 40-30(1) of the ITAA 1997 a depreciating asset is an asset that has a limited effective life and can be expected to decline in value over the time it is used. Subsection 40-80(2) of the ITAA 1997 provides that the decline in value of a depreciating asset will be the cost of the asset if the cost of the asset does not exceed $300 and the asset is used predominantly for the production of assessable income. In the case of the cost being in excess of $300, the assets decline in value must be worked out then the work-related rather than private portion of that calculated. Subsection 40-105(1) allows you to self assess the effective life of a depreciating asset. The calculation to determine the decline in value for an income year is; Base value x Days held x 200% 365 Assets effective life Following the decision in Morris and Ors v. Federal Commissioner of Taxation [2002] FCA 616; (2002) 50 ATR 104; 2002 ATC 4404 it is accepted that sunglasses protect from the risk of illness or injury as a result of exposure to the sun's glare therefore enabling the person to earn their assessable income and increase their productivity. There is a clear connection between the expenditure incurred and the earning of assessable income. Glasses are a depreciating asset for taxation purposes. A taxpayer is entitled to a deduction for the decline in value of the glasses under section 40-25 of the ITAA 1997. Apportionment of the expense under subsection 40-25(2) of the ITAA 1997 will be necessary where the glasses are used partly for private purposes. | Detailed Reasoning - In your situation: The amount of your work-time spent working outdoors is central to your job. As the cost is over $300, a life expectancy for the glasses must be used to calculate the decline in value rather than just using the cost. The degree to which they are used privately is a matter of fact, something that cannot be ruled upon but must be calculated on a reasonable basis by yourself. The expenditure must have been incurred meaning that it must have been paid during the year and has not been reimbursed in whole or part by your employer or by a health insurer or anyone else.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. If you have any concerns about this ruling you wish to discuss, you will find our contact details in the fact sheet.