Private ruling: Work related expenses
Date of advice: 25 July 2017
Published: November 2017
Ruling period: Year ended 30 June 2017 | Year ending 30 June 2018 | Year ending 30 June 2019 | Year ending 30 June 2020 | Year ending 30 June 2021
Date scheme commenced: 1 July 2015

Ruling: Question and answer | Are you entitled to a deduction for the cost of your medical appliance? | No.

Relevant facts and circumstances: You are in paid employment. You have been diagnosed with a medical condition. You have supplied a copy of a letter from your doctor in support of this. Your qualifications, work and rest requirements are governed by a national law. You are required under this law to have your fitness assessed as part of wider fatigue management requirements. During a routine fitness assessment, it was determined that you required the use of a medical appliance. The requirement for this appliance was not for your general health but only for your employment. The letter from your doctor’s supports this requirement. You have purchased the medical appliance to maintain your ability to pass the requirements of the fitness assessment and so remain employed. If not for this work role the equipment would not be purchased or required. The expense has been incurred by you. You have provided a copy of the tax invoice in support of this. You paid a total $X for the medical appliance. Your intention is to claim a deduction for depreciation. The cost for treatment support you consider would also be deductible as it is work related but this would be an expense in the year it was paid. You have not received a refund from a health insurer. The expenditure is related to complying with law governing the operations of your employment and is necessary for you to produce assessable income.

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 Income Tax Assessment Act 1997 (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. Section 40-25 of the Income Tax Assessment Act 1997 (ITAA 1997) allows a deduction for the decline in value of depreciating assets to the extent that they are not held for private purposes. Generally medical expenses have no direct connection to the gaining or producing of assessable income. The medical expense relates to a personal medical condition and is private in nature. Taxation Ruling IT 2217 addresses income tax deductions for medical appliances. It refers to the decision in Case Q17 83 ATC 62; Case 82 26 CTBR (NS) 556, where the taxpayer was a primary producer who had purchased a hearing aid so that his business associates could communicate with him in the day to day running of the business. The taxpayer argued that the hearing aid was an essential tool to enable him to carry on his business. The Board of Review disallowed the deduction. It was held that despite the connection between the outlay of the taxpayer and the taxpayer’s income, the outlay was not necessarily incurred in carrying on a business for the purpose of gaining or producing assessable income. The primary cause of the expenditure was for the correction of a disadvantage that was personal to the taxpayer. The expense was therefore of a private nature. Accordingly, claims for income tax deductions in respect of expenses incurred on medical appliances, for example, wheelchairs, hearing aids, spectacles, artificial limbs and similar appliances used by persons in carrying out their duties of an employment are not allowable. In your case, you needed to purchase the medical appliance in order to maintain your employment. In light of the principles outlined above, the cost of $X for the medical appliance is private in nature. The expense is not considered to be incurred in gaining your assessable income, but rather incurred in overcoming a medical condition. Therefore, you are not entitled to claim a deduction for this expenditure as it is private in nature.