1011720121827 | Legal database

Disclaimer
This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law.

You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4.

Edited version of private ruling

Authorisation Number: 1011720121827

This edited version of your ruling will be published in the public Register of private binding rulings after 28 days from the issue date of the ruling. The attached private rulings fact sheet has more information.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. Contact us at the address given in the fact sheet if you have any concerns.

Subject: cosmetic surgery

Question 1

Are you entitled to a deduction for the cost of your cosmetic surgery?

Answer: No

Question 2

Are you entitled to a medical expenses tax offset for your cosmetic surgery?

Answer: No.

This ruling applies for the following period

Year ended 30 June 2010

The scheme commenced on

1 July 2009

Relevant facts and circumstances

You are a sex worker.

You had a breast augmentation surgery as well as dermabrasion and laser treatment to your face.

You paid for the procedures yourself.

Your income increased following the procedures.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 8-1.

Income Tax Assessment Act 1936 Section 159P.

Income Tax Assessment Act 1936 Subsection 159P(1).

Income Tax Assessment Act 1936 Subsection 159P(4).

Reasons for decision

Deduction

Section 8-1 of the Income Tax Assessment Act 1997 (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 and facial treatments 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.

Medical expenses tax offset

A medical expenses tax offset is available under subsection 159P(1) of the Income Tax Assessment Act 1936 (ITAA 1936) for an income year where you pay for medical expenses in that income year. You are not entitled to a tax offset for medical expenses which are ineligible medical expenses.

Paragraph 159P(4) of the ITAA 1936 defines 'ineligible medical expenses' as payments to a legally qualified practitioner, nurse or chemist, or a public or private hospital, in respect of a cosmetic operation that is not a professional service for which a Medicare benefit is payable.

In your case, you have had breast augmentation surgery and facial treatments. As these treatments are considered cosmetic and no Medicare benefit is payable, you are not entitled to a medical expenses tax offset.

Copyright notice

You are free to copy, adapt, modify, transmit and distribute material on this website as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).