Private ruling: Work related expenses
Date of advice: 24 September 2019
Published: November 2019
Ruling period: Year ended 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Are you entitled to a deduction for the cost of a Continuous Positive Airway Pressure (CPAP) machine? | A1: No.

Relevant facts and circumstances: You have been diagnosed with sleep apnoea. You are required to use a CPAP machine to sleep each night. If you do not use this machine you will not be able to carry out your work duties.

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, 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 their hearing aid was an essential tool to enable them to carry on their business. The Board of Review disallowed the deduction. It was held that despite the connection between the outlay and the taxpayer's income, along with the fact that the taxpayer might be unable to earn his assessable income without the aid of the relevant appliance, 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 have been diagnosed with sleep apnoea and you are required to use a CPAP machine. Although the above case refers to a hearing aid this case can also be applied to your situation as the CPAP machine is a medical appliance and is used to assist with your medical problem. However, the expense of purchasing the CPAP machine could not be considered to be incurred in gaining assessable income but, rather, it would put you in a position where you would be able to work and therefore earn assessable income. In light of the principles and facts outlined above, the costs of a CPAP machine 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.