Private ruling: Work related expenses
Published: July 2013
Ruling period: Year ended 30 June 2013
Date scheme commenced: 1 July 2012

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

Relevant facts and circumstances: You sell health and wellbeing products for a network marketing company which uses direct selling as its distribution method. You receive commission on the products you sell. For the past several years the gym where you hold a membership has allowed you to set up a stand where you display your flyers, conduct tastings and promotion of the weight loss program and foods. The majority of your clients are sourced through the gym.

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 gym 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. In your case you sell health and wellbeing products through the direct selling method. It is not considered that strenuous physical activity is an essential and regular element of your sales activities and nor is it considered that the gym membership fees have a sufficient nexus to the production of your assessable income from selling products at the gym. Accordingly, the cost of your gym membership is considered to be a private expense and not allowable under section 8-1 of the ITAA 1997.