Private ruling: Work related expenses
Date of advice: 1 April 2026
Published: 9 June 2026
Ruling period: Year ended 30 June 20YY
Date scheme commenced: 1 July 20YY

Ruling: Q1: Are you entitled to claim work related expenses associated with your participation in the event under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997)? | A1: No.

Relevant facts and circumstances: You are an employee of Employer Z. You have a number of duties in your position with Employer Z. You are a member of an association. The association operates under a framework supported by Employer Z. The association organises and administers various events. Membership of the association is voluntary; however, participation is encouraged and supported by your Employer. While membership is not a strict employment requirement, participation occurs in the context with your work. You represented Employer Z in an event that is held each year. You submitted an entry application through the official event entry system and complied with all requirements. You participated as part of the association and represented Employer Z. You were classified as on duty for the entire event. The event runs over a number of days. You participated as a competitor through the association. You wish to claim several items as a deduction or depreciation. You were not paid to participate in the event. Your employer did not reimburse you for any of your 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 (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 for expenses which are of a capital, private or domestic nature, where they lack sufficient nexus to income production, or if they are incurred in gaining or producing exempt income or where a provision of the tax law prevents it. The High Court majority in Commissioner of Taxation v Payne [2001] HCA 3 said it is well established that these words are to be understood as meaning incurred 'in the course of' gaining or producing assessable income, and do not convey the meaning of outgoings incurred 'in connection with' or 'for the purpose' of deriving assessable income ( Commissioner of Taxation v Day [2008] HCA 53). The majority further stated that the meaning of 'in the course of' gaining or producing income was amplified in Ronpibon Tin NLv Commissioner of Taxation (Cth) [1949] HCA 15 where it was held that: ... to come within the initial part of [section 8-1] it is both sufficient and necessary that the occasion of the loss or outgoing should be found in whatever is productive of the assessable income, or if none be produced, would be expected to produce assessable income... Taxation Ruling TR 2020/1 Income Tax: employees: deductions for work expenses under section 8-1 of the Income Tax Assessment Act 1997 notes in part: 16. For expenses incurred by employees, the fundamental question is whether an expense is incurred while earning employment income. This involves considering the proper scope of the taxpayer's work activities to determine if the circumstances of the expense have a sufficiently close connection to earning the employment income. 19. More difficult are cases where an expense ordinarily bears the characteristics of an everyday personal expense. Although generally not deductible, a deduction may be allowed if the employment context creates a close connection between the expenditure and the production of assessable income through work activities; that is to say, 'the occasion of the expenditure is to be found in the income-earning activity itself' 22. The requirement that expenses be incurred in the course of producing assessable income means that it is not enough to show only that there is some general link or causal connection between expenditure and the production of income. The expenditure must have a sufficiently close connection to performance of the employment duties and activities through which the employee earns income. Even if the positive test of section 8-1 is satisfied, employees cannot claim deductions for outgoings that are private in nature. The term 'private' is not defined in the Act but has its ordinary meanings of 'personal'. Except in very limited circumstances, gym fees and other fitness expenses (such as skipping ropes, weights and other fitness equipment) are private expenses. You can't claim a deduction for these expenses. This is the case even if you're required to pass medical examinations and fitness tests to maintain your employment. However, there are very limited circumstances where you can claim a deduction if your employment requires an extremely high level of fitness. This means strenuous physical activity is an essential and regular element of your work. Regardless of your circumstances, you can't claim a deduction for conventional clothing you use in the course of keeping fit. This includes such things as tracksuits, running or aerobic shoes, socks, T-shirts, and shorts. Generally, expenses incurred in the maintenance of physical fitness and wellbeing are not deductible as they are dependent on the employee's personal circumstances, to enable them to be sufficiently healthy to undertake both private and work activities. These expenses are everyday personal expenses and are not deductible. Similarly, an expense that restores standard health, comfort, and mobility after performing work activities does not have the requisite connection to producing income and is of a private character. Fitness related expenses can be deductible where a taxpayer is required to maintain a very high level of fitness as a necessary aspect of their work activities, well above the profession's general standard. Application to your circumstances : You are an employee of Employer Z. You participated in an event. Although the event allows you to demonstrate your abilities and it enables you to maintain and increase your fitness it was not required in order for you to maintain your job with Employer Z or required as part of your day to day duties. Participation in the event was optional, and you were not required to participate in order to keep your job with Employer Z or as part of your contract with Employer Z. The event does not have the relevant connection to your employment with Employer Z. You are therefore not entitled to claim a deduction for any of the expenses you incurred to participate in the event under Section 8-1 of the ITAA 1997.