Private ruling: Membership fees
Date of advice: 20 August 2015
Published: August 2015
Ruling period: Year ended 30 June 2014. | Year ended 30 June 2015.
Date scheme commenced: 1 July 2013

Ruling: Q1: Are you entitled to a deduction for the cost of your gym membership fees? | A1: No.

Relevant facts and circumstances: You are paid a wellbeing allowance amount each month. The purpose of the allowance is to encourage employees to be fit and healthy. You have used the allowance for your gym membership fees. Your allowance is included in taxable income. You have paid tax on the allowance.

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

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. Generally, fitness expenses such as the cost of a membership are considered to be private in nature and no deduction is allowed. However, a deduction is allowable for these costs if strenuous physical activity is an essential and regular element of the taxpayer's income-earning activities, such as a Police Academy physical training instructor or a member of the Special Air Services Regiment (SAS). Their costs would be incurred to maintain a level of fitness well above the general standard. Whilst you received a wellbeing allowance, the expenditure you incurred on your fitness is private and domestic in nature and is not related to your income earning activities. In contrast, someone who has been paid a tool allowance is able to claim expenditure on tools, used for work purposes, as they are not considered private in nature and are used to produce assessable income Accordingly, the cost of your membership and other related expenses are considered to be a private expense and not allowable under section 8-1 of the ITAA 1997.