Private ruling: Work related expenses- medical expenses
Published: August 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 medical examination incurred to gain employment? | 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.


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

Reasons for decision: Summary: You are not entitled to a deduction for the cost of medical expenses incurred prior to the commencement of employment. As the expense was incurred prior to commencing employment they are considered private in nature and are therefore not deductible. | Detailed Reasoning - Reasoning: 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. Taxation Ruling TR 95/19 (Airline Industry employees) provides guidance in relation to the deductibility of expenditure incurred whilst attending medical examinations or appointments.TR95/19 paragraph 23 provides that expenses associated with medical examinations for licence renewal (relevant airline industry licences, not driving licences), including the cost of travel to and from the medical practitioner, are deductible. These are allowable due to the direct nexus between the need to hold the licence (a pilot's licence for example) and the ability of the employee to perform their duties. As having a medical examination is a condition of the renewal of certain licences the relevant nexus between expenditure and income earning is satisfied. Costs associated with gaining the initial licence are not deductible. 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 performing the job. Rather, they were a prerequisite to commencing the job. Therefore, you cannot claim a deduction for the cost of medical tests as it does not relate to the earning of your assessable income. | Summary: You are not entitled to claim your expenses under the medical expenses tax offset as they do not qualify. The expense was not in relation to an illness or operation and therefore does not meet the definition under subsection 159P(4) of the ITAA 1936. | Detailed Reasoning - Reasoning: 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 $2,120 if you are a single and your adjustable taxable income is $84,000 or below. The medical expenses tax offset is 20% of the amount by which the net medical expenses exceeds $2,120. 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)). In your case you incurred expenses for medical examinations 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.

Relevant facts: You were required to undertake medical examinations prior to being employed | You incurred medical expenses