Edited version of private ruling

Authorisation Number: 1011768846652

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Ruling

Subject: Medical expenses

Questions

Are you entitled to a deduction for corneal replacement surgery?

Answer: No

This ruling applies for the following periods

Year ended 30 June 2011

Year ending 30 June 2012

The scheme commenced on

1 July 2010

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 8-1

Relevant facts and circumstances

You suffer from an eye condition which cannot be adequately corrected by prescription glasses.

Your daily duties employment duties prove difficult with your current eyesight.

You believe that your poor eyesight is an impediment to you obtaining a promotion as well as being a safety issue.

Surgery will improve your eyesight. This surgery is not covered by Medicare or your private medical insurer.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 8-1

Reasons for decision

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 deductibility for expenditure on medical appliances is addressed in Taxation Ruling IT 2217. The ruling discusses two Taxation Board of Review decisions in relation to whether a medical appliance can be claimed as a work related expense. In Case P31 82 ATC 141; Case 96 25 CTBR (NS) 715, a quadriplegic law lecturer was not allowed an income tax deduction for depreciation, maintenance and insurance on a motorized wheelchair which he used 75% of the time in connection with his employment. Similarly, in Case Ql7 83 ATC 62; Case 82 26 CTBR(NS) 556, a farmer was denied the cost of a hearing aid which he claimed was an essential tool in carrying on his business.

In both cases the Board found that the sole purpose of the medical appliance was to aid the taxpayer to overcome his personal disability so that he could earn his assessable income. The Board concluded that, although the taxpayer might be unable to earn his assessable income without the aid of the relevant appliance, the outlay on the appliance was not incurred in gaining assessable income or carrying on a business for that purpose. The expenditure was incurred to help overcome a disability suffered by the taxpayer.

Although in your situation your expense is related to the costs of surgery and not medical appliances the same line of reasoning as that used in the Board of Review decisions above can be applied to your situation. The purpose of your surgery is for treatment of your eye condition. The medical expenses you will incur in relation to the operation have no direct connection to the gaining or producing of assessable income as the purpose of the expense is to return you to health. The expense relates to a personal medical condition and is private in nature. 

Consequently, the expenditure is not deductible under section 8-1 of the ITAA 1997 as it is considered a private expense and an expense that is not incurred in earning your assessable income.