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Edited version of private advice
Authorisation Number: 1012681021869
Ruling
Subject: Medical and drug testing
Question
Are you entitled to a deduction for medical and drug testing expenses?
Answer
No.
This ruling applies for the following periods
Year ended 30 June 2014
Year ended 30 June 2015
The scheme commenced on
1 July 2013
Relevant facts
You are trying to get a job and some prospective employers require that you undergo medical and drug testing at your own expense.
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.
The decision of the High Court in FC of T v. Maddalena 71 ATC 4161; (1971) 2 ATR 541 establishes the principle that no deduction is allowable for expenses if the expense is designed to enable a taxpayer to get employment or to obtain new employment. Such expenses are incurred at a point too soon to be regarded as incurred in gaining or producing assessable income.
In Taxation Determination TD 93/112 Income tax: is a taxpayer who is required, as a condition of employment, to be within a specified weight to height ratio entitled to a deduction for a weight reduction program?, 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 are required to undergo medical and drug testing to enable you to get a job. As stated above, the expenses come at a point too soon to be regarded as incurred in gaining or producing your assessable income.
Therefore, while it is accepted that you do incur these expenses and you then do not get the job, you are not entitled to a deduction for medical and drug testing expenses.
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