Private ruling: work related expenses
Published: December 2011
Ruling period: Year ended 30 June 2011
Date scheme commenced: 1 July 2010

Ruling: Q1: Are you entitled to a deduction for the cost of your cosmetic surgery under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997)? | A1: 

Relevant facts and circumstances: This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling. In the 2010-11 financial year you underwent a breast augmentation procedure. You were working as a stripper at the time and trading under your own Australian Business Number. You chose to get the augmentation done in order to better your chances of earning more money.

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

Reasons for decision: Summary: Section 8-1 of the ITAA 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. The courts have considered the meaning of 'incurred in gaining or producing assessable income'. In Ronpibon Tin NL Tong Kah Compound NL v. Federal Commissioner of Taxation (1949) 78 CLR 47; 56 ALR 785; 8 ATD 431 the High Court stated that: For expenditure to form an allowable deduction as an outgoing incurred in gaining or producing assessable it must be incidental and relevant to that end. The words "incurred in gaining or producing the assessable income" mean in the course of gaining or producing such income. Medical expenses have no direct connection to the gaining or producing of assessable income. There is insufficient connection to the gaining or production of assessable income for a deduction to be allowed as the expenditure is too remote. In addition, medical expenses can be characterised as being of a private nature and therefore can also be excluded on that ground. In your case, although you believe the purpose of the breast augmentation may help to improve your income earning activities, this does not change the private nature of the expenses incurred. There is no direct connection between the costs of the surgery and the derivation of your income from that employment. You are therefore not entitled to a deduction for the medical expenses incurred in undergoing the cosmetic surgery under section 8-1 of the ITAA 1997.

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.