Private ruling: Work related expenses
Published: September 2013
Ruling period: Year ended 30 June 2013
Date scheme commenced: 1 July 2012

Ruling: Q1: Are you entitled to a deduction for obtaining two medical assessments as requested by your employer? | A1: Yes. | Q2: Is the cost of a drivers licence a deductible expense? | A2: No. | Q3: Are you entitled to a deduction for the cost to rent and then purchase a continuous positive airway pressure (CPAP) machine? | A3: No.

Relevant facts and circumstances: You are an Australian resident for tax purposes. You are an employee. You are required under legislation to attend annual medical examinations. The medical examinations were at your own expense and you did not receive a reimbursement from Medicare Australia or your private health fund. You have been diagnosed as suffering from a condition by a legally qualified medical practitioner. As part of your treatment you originally rented and then purchased your own medical appliance. You have received a rebate from your private health fund for the purchase of the medical appliance.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 8-1

Reasons for decision: Summary: Under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) you can claim a deduction for expenses to the extent to which they are incurred in gaining or producing your assessable income, or they are necessarily incurred in carrying on a business for the purpose of gaining or producing your assessable income. No deduction is allowed for expenses to the extent to which they are of a capital, private or domestic nature or they are incurred in gaining or producing exempt income. To be deductible under section 8-1 of the ITAA 1997 a loss or outgoing must have a sufficient connection with the derivation of the taxpayer's assessable income. | Detailed Reasoning - Medical examinations for licence renewal: The cost of medical examinations required for the renewal of a relevant licence required for employment is an allowable deduction. In your case, you gain your income from activities as an employee. It is a legislated requirement that you attend several medical assessments and provide at your own cost, the medical assessment reports as requested by your employer You are entitled to include the cost of the two medical assessment reports as a work related deduction in your income tax return. | Detailed Reasoning - Driver's licence: While the holding of a driver's licence may be a condition of employment, it does not follow that the licence fees are deductible. The right to drive on the public roads does not cease to be a private right merely because the taxpayer is employed in some capacity which involves the use of the public road system. In Case R49 84 ATC 387; 27 CTBR (NS) Case 104 , it was held that even though travel was an essential element of the work to be performed by the taxpayer, a driver's licence was still an expense that was private in nature and the cost was not an allowable deduction under section 8-1 of the ITAA 1997. This principle is not altered if the holding of a driver's licence is a condition of employment (Taxation Determination TD 93/108). Therefore, you are not entitled to claim a deduction for the fees charged for issuing a driver's licence. | Detailed Reasoning - Deductions for medical appliances: Taxation Ruling IT 2217 addresses income tax deductions for medical appliances. It refers to the decisions in Case Q17 83 ATC 62; Case 82 26 CTBR (NS) 556 and Case P31 ; Gilbert v. Federal Commissioner of Taxation 82 ATC 141; Taxation Case 96 25 CTBR (NS) 715 where it was found that the sole purpose of a wheelchair or 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 the relevant appliance, the outlay on the appliance was not incurred in gaining the assessable income but rather was incurred to help overcome an unfortunate disability suffered by the taxpayer. In your case, you originally rented and then purchased your own medical appliance to assist you to complete your employment duties. These expenses are not incurred in gaining your assessable income, but rather incurred in overcoming a personal medical condition. This is considered private in nature and accordingly you are not entitled to a deduction for these expenses.