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Edited version of your written advice
Authorisation Number: 1012812394488
Ruling
Subject: Work related expenses - medical expenses - cosmetic surgery
Question
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)?
Answer
No.
This ruling applies for the following period:
Year ending 30 June 2015
The scheme commences on:
1 July 2014
Relevant facts and circumstances
You are currently in the entertainment industry.
You are contemplating undergoing cosmetic surgery, which you believe will enable you to continue working in the entertainment industry.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 8-1.
Reasons for decision
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 cosmetic surgery 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.
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.
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