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Edited version of your private ruling
Authorisation Number: 1012506422553
Ruling
Subject: Medical and police check
Question
Are you entitled to a deduction for the costs associated with obtaining a medical and police check?
Answer
No
This ruling applies for the following period
Year ended 30 June 2013
The scheme commenced on
1 July 2012
Relevant facts
You work in a particular field and will be involved in a foreign exchange program for work.
You will continue to be paid by your Australian employer for the period of the foreign exchange program.
As part of the requirements for the exchange program you are required to undergo a medical and police check.
These costs are not part of the process of obtaining a visa.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 8-1
Reasons for decision
Section 8-1 of the Income Tax Assessment Act 1997 states that you can deduct from your assessable income any loss or outgoing to the extent that it is incurred in gaining or producing your assessable income. You cannot claim a deduction if the loss or outgoing is of a capital, private or domestic nature.
For a deduction to be allowed there must be sufficient nexus between the loss or outgoing and the assessable income. The expense must give rise to or help produce assessable income for it to be deductible.
In TD 93/112 the Commissioner adopted the reasoning of Hill J in FC of T v Cooper (1990) 21 ATR 525; 90 ATC 4580, in that an employer's requirement that an employee incur expenditure which is not related to the income-producing activities of that employee, does not convert the expenditure into a deductible outgoing.
In your case, you will be involved in a foreign exchange program. As part the requirements for this program, you were required to undergo a medical and police check.
As the medical and police check was conducted before you began your program, the expense is an outgoing that precedes the earning of assessable income. It is not an expense incurred in the course of gaining assessable income. The expense is therefore not deductible.
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