Edited version of your private ruling

Authorisation Number: 1012536747563

Ruling

Subject: Deduction for medical expenses

Question

Are you entitled to a deduction for expenses incurred when visiting a medical provider for treatment?

Answer

No.

This ruling applies for the following periods

Year ended 30 June 2010

Year ended 30 June 2011

Year ended 30 June 2012

Year ended 30 June 2013

The scheme commenced on

1 July 2009

Relevant facts

You are unable to work and you receive income from a salary continuance insurance policy in relation to your ongoing incapacity.

In order to continue to receive your payments from the insurance company you are required to receive treatment provided by your regular doctor. Your doctor arranges for you to attend appointments with health care providers, and this treatment is regular and ongoing and is designed to get you get better and able to return to work.

Following your visits for medical treatment your insurance company is provided with a report or a medical certificate.

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 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, 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.'

In Rossitto v FCT 39 ATR 1019, 98 ATC 2093 the taxpayer suffered an injury at work and was paid workers compensation for the difference between what he was able to earn in suitable employment and what he would have earned had he been able to continue his job as an engineer. The payment of compensation was conditional on his maintenance of a rehabilitation program.

The taxpayer claimed motor vehicle expenses to see his physiotherapist and doctor, it was held that even though it was mandatory that he undertake the rehabilitation program, the medical expenses were a prerequisite of receiving compensation and not necessarily incurred in the gaining or production of his assessable income.

Your case is similar to Rossittos case. The cost of doctor appointments and attending other health providers is not incurred in deriving your assessable income and is private in nature.

The supply of medical certificates and medical reports to the insurance company following your visits are incidental to the primary purpose of you attending to receive your medical treatment.

Generally, medical expenses have no direct connection to the gaining or producing of assessable income. In the majority of cases, medical treatment is provided to return a person to good heath. There is insufficient connection to the gaining or production of assessable income for a deduction to be allowed.

In your case, although you consider that undergoing medical treatment is connected with you continuing to receive your regular payments from the insurance company, there is an insufficient connection between the costs of the treatment and the derivation of your income. In addition, medical expenses can be characterised as being of a private nature and are excluded on that ground.

Therefore, you are not entitled to claim a deduction for the medical expenses incurred by you under section 8-1 of the ITAA 1997.