Private ruling: Work related deductions - personal massages
Date of advice: 14 September 2020
Published: November 2020
Ruling period: Period ended 30 June 2020
Date scheme commenced: 1 July 2019

Ruling: Q1: Can you claim massage expenses as a work-related deduction under section 8-1 of the Income Tax Assessment Act 1997 ? | A1: No. | Q2: Is the company allowed a deduction for employee massages as an employee fringe benefit expense under section 45 of the Fringe Benefits Tax Assessment Act 1986 ? | A2: Yes

Relevant facts and circumstances: You are a doctor working as a general practitioner. You are an employee of your own company. You have three therapeutic massages each week. The massages are provided by registered massage therapists. You have more energy, enthusiasm, concentration and vigour in the weeks you have massages. You work 90 hours each week when you have regular massages. This includes higher paying duties. When you do not have massages, you work the standard 40 hours in a week. Your income increases in the weeks you have massages.

Relevant legislative provisions: Section 8-1of the Income Tax Assessment Act 1997 | Section 45of the Fringe Benefits Tax Assessment Act 1986

Reasons for decision: Detailed Reasoning - Question 1 - Massage Expenses: Section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) allows a deduction for expenses to the extent they are incurred in gaining or producing assessable income or are necessarily incurred in carrying on a business for the purpose of gaining or producing assessable income. A deduction will not be allowed under section 8-1 of the ITAA 1997 for expenses which are of a capital, private or domestic nature or if they are incurred in gaining or producing exempt income or where a provision of the tax law prevents it. Generally, expenses incurred in the maintenance of physical fitness and wellbeing (including massages) are not deductible as they are private and domestic expenditure. Fitness related expenses are deductible where a taxpayer is required to maintain a very high level of fitness, well above the profession's general standard. For example, in Taxation Ruling TR 95/17 Income tax: employee work-related deductions of employees of the Australian Defence Force , the Commissioner of Taxation states at paragraphs 119 and 119A that an infantryman in Australian Defence Force will be denied a fitness related expense. In contrast, a member of the Special Air Services Regiment (SAS) will be allowed a fitness related expense. The rationale being that the SAS officer is a member of an elite force and is therefore required to maintain a much higher level of fitness than other Defence Force personnel. Where an employee incurs expenses to maintain a general standard of fitness or wellbeing, such expenses are considered of a private or domestic nature. In Case P90 82 ATC 431; (1982) 26 CTBR (NS) Case 24 (Case P90), the taxpayer was a ballet dancer who toured overseas and appealed against disallowed massage expenses. The ballet dancer made a submission that her body was a machine that performed the artistic income producing activity. The members of the Board applied the argument from Federal Commissioner of Taxation v. Finn (1961) 106 CLR 60; 12 ATD 348; 8 AITR 406, that the expenditure was incidental to the proper execution of her duties and that undergoing the massage treatment was a necessary part of her job. Your case can be distinguished from Case P90 as in that case the body was itself an instrument of artistic performance. You are not a professional performer. In your case, you incur expenses to receive massages which you have provided gives you more energy, enthusiasm, concentration and vigour and your income increases. This relationship can be described as maintenance of a general standard of physical fitness and wellbeing. As your employment as a doctor does not require that necessary higher level of fitness required to allow such a deduction, your massage expenses are private in nature and not deductible. | Detailed Reasoning - Question 2 - Employee Fringe Benefit expense: As described above, massages are private in nature and not deductible under section 8-1 of the ITAA 1997. If your company chooses to pay for massages as an employee benefit, your company will need to calculate fringe benefits tax on the value of the benefit they have provided to the employee. Your company can claim a deduction for employee massages as an employee fringe benefit expense under section 45 of the Fringe Benefits Tax Assessment Act 1986 .