Private ruling: Hearing aids
Published: July 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 hearing aids? | A1: No. | Q2: Does the cost of hearing aids qualify as a medical expense for the purpose of claiming a medical expenses tax offset? | A2: 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 suffer from a hearing loss and have purchased hearing aids. While we accept that you may need good hearing for your job, the expense is not considered to be incurred in gaining your assessable income, but rather incurred in overcoming a medical condition. Therefore, you cannot claim a deduction for the cost of a hearing aid as it does not relate to the earning of your assessable income. | Detailed Reasoning - Medical expenses tax offset: 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. Subsection 159P(4) of ITAA 1936 includes as medical expenses, payments in respect of a hearing aid. In your case you incurred expenses to purchase new hearing aids. Therefore your expenses are considered to be eligible expenses for the purposes of the 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. | Relevant facts: You are an Australian resident. | You suffer from hearing loss. | You have purchased high technology hearing aids to assist you when using different technology, including Skype, mobile phone and other wireless connected devices. | The hearing aids can be set to filter out background noises and stop the whistling that can happen with other hearing aids.