Private ruling: Medical expenses
Published: August 2012
Ruling period: Year ended 30 June 2012
Date scheme commenced: 1 July 2011

Ruling: Q1: Are you entitled to a deduction for the cost of medical tests required to enable you to start your job? | A1: No. | Q2: Do the costs of medical tests required to enable you to start a job qualify as a medical expense for the purpose of claiming a medical expense tax offset? | A2: No. | Q3: Do the costs of immunisation qualify as a medical expense for the purpose of claiming a medical expense tax offset? | A3: Yes.


Relevant legislative provisions: Income Tax Assessment Act 1997 Section 8-1 | Income Tax Assessment Act 1936 Section 159P

Reasons for decision: Detailed Reasoning - Deduction: Section 8-1 of the Income Tax Assessment Act 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 medical expenses have no direct connection to the gaining or producing of assessable income as the purpose of the expense is to return you to health. The expense relates to a personal medical condition and is private in nature. There is insufficient connection to the gaining or production of assessable income for a deduction to be allowed as the expenditure is too remote. Taxation Ruling IT 2217 addresses income tax deductions for medical appliances. It refers to the decision in Case P31 82 ATC 141; Case 96 26 CTBR (NS) 715 where it was found that the sole purpose of a hearing aid was to aid the taxpayer in overcoming a personal disability in order to earn assessable income. The court held that although the taxpayer might be unable to earn the assessable income without the aid of a hearing aid, the outlay was not incurred in gaining assessable income but rather was incurred to help overcome an unfortunate disability suffered by the taxpayer. In your case, you gain your income from activities as an employee. You were required to undergo medical tests prior to commencing your job. These expenses were not incurred in going the job. Rather, they were a prerequisite to commencing the job. Therefore, you cannot claim a deduction for the cost of medical tests or immunisation as it does not relate to the earning of your assessable income. | Detailed Reasoning - Medical expenses tax offset - blood tests: A medical expenses tax offset is available under section 159P of the Income Tax Assessment Act 1936 (ITAA 1936), where you incur medical expenses in an income year for yourself or a dependant who is an Australian resident. The medical expense tax offset is only available if the amount of medical expenses (reduced by any entitlement to reimbursement from a health fund or government authority) exceeds $2,000. The medical expenses tax offset is 20% of the amount by which the net medical expenses exceeds $2,000. Medical expenses are defined in subsection 159P(4) of the ITAA 1936 to include payment to a legally qualified medical practitioner, nurse or chemist, or a public or private hospital, in respect of an illness or operation (paragraph (a)). Paragraph (d) also includes payments for therapeutic treatment administered by direction of a legally qualified medical practitioner. In your case you incurred expenses for blood tests prior to commencing work. While the cost was paid to a legally qualified medical practitioner, they were not in respect of an illness or operation. Your expenses do not meet the definition under subsection 159P(4) of the ITAA 1936. Therefore, the expense does not qualify as a medical expense for the purpose of calculating a medical expenses tax offset. | Detailed Reasoning - Medical expenses tax offset - immunisation: The cost of immunisation is in respect of the prevention of an illness. As such, the expense qualifies as a medical expense for the purpose of calculating a medical expenses tax offset.

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. | Your employer required you to undergo blood tests and have an immunisation prior to commencement.