Private ruling: Work Related Expenses
Date of advice: 3 May 2017
Published: September 2017
Ruling period: Year ended 30 June 2016
Date scheme commenced: 1 July 2015

Ruling: Q1: Are you entitled to claim a deduction for the cost of a medical appliance as a work-related expense? | A1: No.

Relevant facts and circumstances: You are employed. You are required vehicle license to perform your work in this position. On renewal of this license you were require to take a medical test. You failed this medical test. You have consulted with several medical professionals and incurred expenses to acquire a medical appliance so that you could re-obtain the vehicle license. You were reissued the vehicle license after obtaining the medical appliance.

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 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 a medical appliance to assist you in your job. In light of the principles outlined above, the costs of the medical appliance are private in nature. The expenses are 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.