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Edited version of your written advice
Authorisation Number: 1012720170418
Ruling
Subject: Gym membership
Question
Are you entitled to a deduction for the cost of gym membership?
Answer
No.
This ruling applies for the following period
Year ended 30 June 2015
Year ended 30 June 2016
The scheme commenced on
1 July 2014
Relevant facts
You were injured at work and are receiving worker's compensation.
You were advised by your doctor to join a gym to help strengthen your injury while you were off work.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 8-1
Reasons for decision
Section 8-1 of the Income Tax Assessment Act 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.'
Gym membership expenses have no direct connection to the gaining or producing of assessable income. The purpose of the expense is to assist with your rehabilitation. 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, gym membership expenses can be characterised as being of a private nature and therefore can also be excluded on that ground.