Private ruling: Deductibility of work related expenses
Date of advice: 3 September 2015
Published: September 2015
Ruling period: Year ended 30 June 2015
Date scheme commenced: 1 July 2014

Ruling: Q1: Are you entitled to a deduction for the costs associated with obtaining a medical check? | A1: No.

Relevant facts and circumstances: You were required to complete a pre-employment medical check for suitability. The company initially paid the expense. You left the job prior to a three month period as part of the terms of your contract. As part of your employment contract you are now required to repay your pre-employment medical check expenses.

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 states that you can deduct from your assessable income any loss or outgoing to the extent that it is incurred in gaining or producing your assessable income. You cannot claim a deduction if the loss or outgoing is of a capital, private or domestic nature. For a deduction to be allowed there must be sufficient nexus between the loss or outgoing and the assessable income. The expense must give rise to or help produce assessable income for it to be deductible. In Taxation Determination TD 93/112 the Commissioner adopted the reasoning of Hill J in FC of T v Cooper (1990) 21 ATR 525; 90 ATC 4580, in that an employer's requirement that an employee incur expenditure which is not related to the income-producing activities of that employee, does not convert the expenditure into a deductible outgoing. In your case, as part of the requirements for your employment, you were required to undergo a medical check. As the medical check was conducted before you began your employment, the expense is an outgoing that precedes the earning of assessable income. It is not an expense incurred in the course of gaining assessable income. The expense is therefore not deductible.