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Edited version of your written advice
Authorisation Number: 1051236747966
Date of advice: 13 June 2017
Ruling
Subject: Claiming the cost of medical appointments under work related deductions
Question 1
Are the costs of medical appointments deductible which are required under a replacement income policy?
Answer
Yes
This ruling applies for the following periods:
Year ending 30 June 2016
Year ending 30 June 2017
The scheme commences on:
1 July 2015
Relevant facts and circumstances
You are required to provide medical reports as a pre-requisite for your income protection insurance payout to continue.
The payout is equivalent to a percentage of your existing salary and wages.
You attend the appointments periodically as part of your claim.
The cost, of the appointment and the medical reports are not covered by Medicare.
The sole purpose of these appointments is to full fill the requirement of the policy.
No other medical matters are discussed that do not directly relate to your claim.
Relevant legislative provisions
Income Tax assessment Act 1997 section 8-1
Reasons for decision
Section 8-1 of the ITAA 1997 broadly allows a deduction for any losses or outgoings to the extent to which they are incurred in gaining or producing assessable income except to the extent outgoings are of a capital, private or domestic in nature.
A number of significant court decisions have determined that, for an expense to satisfy the tests in section 8-1 of the ITAA 1997, it must have the essential character of an outgoing incurred in gaining assessable income ( Lunney v. FC of T, Hayley v. FC of T (1958) 100 CLR 478; (1958) 11 ATD 404; (1958) 7 AITR 166) and there must be a nexus between the outgoing and the assessable income so that the outgoing is incidental and relevant to the gaining of assessable income ( Ronpibon Tin NL v. FC of T (1949) 78 CLR 47; (1949) 8 ATD 431; (1949) 4 AITR 236).
In Commissioner of Taxation v. Anstis (2010) 241 CLR 443; (2010) 2010 ATC 20-221; (2010) 76 ATR 735 (Anstis), the Court considered the deductibility of expenses incurred by the taxpayer in undertaking her study which was a requirement to her receiving the Youth Allowance. It was found that the reason for the taxpayer incurring the expenses was not determinative of the question whether they were incurred in gaining or producing the youth allowance. The occasion of her study expenses was to be found in what she did to establish and retain her statutory entitlement to the receipts.
Your case can be likened to the Anstis case, in that you are required to fulfil certain requirements, namely continue to go to your medical practitioner to obtain medical certificates to continue receiving payments of the income protection insurance. Accordingly, the expenses incurred by the taxpayer acquiring medical certificates and reports to retain continued workers compensation payments are deductible under section 8-1 of the ITAA 1997.
The medical appointments are a pre-requisite of satisfying the requirements under the continued payment of the income protection insurance pay-out equal to 75% of your salary and wage income and therefore show a direction connection to the earning of the assessable income and deductible under section 8-1.
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