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ATO Interpretative Decision

ATO ID 2001/752

Income Tax

Massage expenses
FOI status: may be released

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CAUTION: This is an edited and summarised record of a Tax Office decision. This record is not published as a form of advice. It is being made available for your inspection to meet FOI requirements, because it may be used by an officer in making another decision.

This ATOID provides you with the following level of protection:

If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.

Issue

Is the taxpayer entitled to a deduction under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) for the costs of reimbursing an employee for remedial massage expenses?

Decision

Yes, the taxpayer is entitled to a deduction under section 8-1 of the ITAA 1997 for the costs of reimbursing an employee for remedial massage expenses.

Facts

An employee of the taxpayer suffered a back injury whilst performing their duties for the taxpayer. The injury occurred whilst working with heavy machinery.

The employee has a remedial massage each month to relieve the pain caused by the injury. The taxpayer reimburses the employee for the cost of the massage.

Reasons for decision

Section 8-1 of the ITAA 1997 allows a deduction for all losses or outgoings to the extent that 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. However, no deduction is allowed to the extent that the losses or outgoings are of a capital, private or domestic nature or are necessarily incurred in gaining or producing exempt income.

The taxpayer reimburses expenses the employee incurs for remedial massages. The massages provide pain relief to the employee to allow them to continue working. The expenses have the essential character of an income producing expense. The expenses are incidental and relevant to the income producing activity and as such are deductible under section 8-1 of the ITAA 1997.

Date of decision:  5 November 2001

Year of income:  Year ending 30 June 2002

Legislative References:
Income Tax Assessment Act 1997
   section 8-1

Keywords
Deductions & expenses

Business Line:  Private Groups and High Wealth Individuals

Date of publication:  30 November 2001

ISSN: 1445-2782

history
  Date: Version:
You are here 5 November 2001 Original statement
  30 May 2014 Archived

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