Edited version of your private ruling

Authorisation Number: 1012526417292

Ruling

Subject: Work-related expenses

Question

Are you entitled to a deduction for your dental procedures?

Answer

No.

This ruling applies for the following period

Year ended 30 June 2013

The scheme commences on

1 July 2012

Relevant facts and circumstances

You work in the entertainment industry.

You suffered damage to your dental work.

You paid for multiple dental procedures including surgery.

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.

In Ronbipon Tin NL v Federal Commissioner of Taxation (1949) 78 CLR 47; ALR 875; (1949) 23 ALJ 139, the High Court of Australia stated that in order for expenses to be allowable as deductions, the expenses must be incidental and relevant to the gaining of the assessable income. Whether this connection exists is a question of fact to be determined by reference to all the facts of the particular case.

Medical expenses have no direct connection to the gaining or producing of assessable income. The purpose of the expense is to return the taxpayer to health. There is insufficient connection to the gaining or production of assessable income for a deduction to be allowed as the expenditure is of a private nature.

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 dental work and not medical appliances the same reasoning used in the Board of Review decisions applies to your situation. The purpose of your dental procedures was to restore your dental work. The medical expenses you have paid for are in relation to dental procedures and they have no direct connection to the gaining or producing of assessable income as the purpose of 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.