Edited version of private advice

Authorisation Number: 1051841311283

Date of advice: 7 July 2021

Ruling

Subject: Deductions - massages and massage chair

Question1

Are the expenses incurred for massage therapy deductible under s 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997)?

Answer

No.

Question 2

Are the expenses incurred in obtaining a massage chair deductible under s 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997)?

Answer

No.

This ruling applies for the following period:

Year ending 30 June 20XX

The scheme commences on:

1 July 20XX

Relevant facts and circumstances

Your income is derived by your work for a company which predominantly provides balustrade installation services.

This job role has caused the degeneration of your spine.

You have undergone a series of spinal injections to treat the symptoms of the degeneration, but they only provide temporary relief.

The spinal injections and oral medication you took to treat this condition impacted your ability work through diminished coherence from the drugs meaning a safety issue on site.

As a result, you sought alternative treatment in regular massages. This was found to provide relief for 1 to 2 days and allowed you to continue working. However, the time and cost of regular massage every 1 to 2 days proved prohibitive so you tried the use of massage chair.

The massage chair provided the same relief as massage therapy. As such you proceeded to purchase the massage chair in your individual capacity. The daily use of this chair has allowed you to continue working.

Without regular massage there is no other way you are able to work because of the untreated symptoms or the medical treatment rendering him unable to work. This was confirmed by your doctor.

You have not claimed workers' compensation. Furthermore, you have not approached the company to pay for the massage chair.

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 or are necessarily incurred in carrying on a business for the purpose of 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, or a provision of the ITAA 1997 prevents it.

In the year ending 30 June 20XX, you provide balustrade installation services and incurred expenses in relation to massage therapy and a massage chair to mitigate the effects of your spinal degenerative condition. The deductibility of the expenses will be examined under both limbs of subsection 8-1(1) of the ITAA 1997 and the negative limb of paragraph 8-1(2)(b) of the ITAA 1997.

Deductibility of Massage Expenses

Taxation Ruling IT 2217 Income tax deductions: medical appliances, income tax deductions in respect of medical appliances and various case decisions in relation to medical expenses, provides at paragraphs 4 to 6:

In Hayley and Lunney v. FCT (1958) 100 CLR 478, the High Court held that the cost of travel to and from work was not an allowable income tax deduction. Similarly in Lodge v. F.C. of T. 72 ATC 4174, (1972) 3 ATR 254, the High Court held that child minding expenses were not an allowable income tax deduction. In both the cases the Court recognised that the expenditures were incurred for the purpose of earning assessable income and were an essential prerequisite to the derivation of that income. However, the expenditures were not incurred in the actual gaining of the assessable income and, for that reason, did not qualify for income tax deduction.

The same reasoning applies to expenses associated with the provision and maintenance of medical appliances. Claims for income tax deduction in respect of medical appliances have been considered by Taxation Boards of Review on a number of occasions. 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 wheelchair or hearing aid was to aid the taxpayer in overcoming his personal disability in order 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, but rather was incurred to help overcome an unfortunate disability suffered by the taxpayer.

The principles emerging from the various decisions apply to similar situations where taxpayers are required to use some type of medical device or surgical appliance to overcome a physical disability. Accordingly, claims for income tax deductions under sub-sections 51(1), 53(1) and 54(1) in respect of expenses incurred on medical appliances, e.g. wheelchairs, hearing aids, spectacles, artificial limbs and similar appliances used by persons in carrying out the duties of an employment are not allowable. These classes of expenditure would normally qualify as medical expenses for concessional expenditure rebate purposes.

In Federal Commissioner of Taxation v. Cooper 29 FCR 177; 91 ATC 4396; (1991) 21 ATR 1616 (Cooper), the court examined the deductibility of expenses which are normally characterised as being private or domestic in nature. The legislation referred to in Cooper is subsection 51(1) of the Income Tax Assessment Act 1936 (ITAA 1936) which is the predecessor of section 8-1 of the ITAA 1997.

An expense incurred for remedial and rehabilitation massages to relieve soreness and aches and pains is generally considered to be a medical expense. Generally, medical expenses 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 decision in Case U83 87 ATC 481 (Case U83) recognised that medical expenses have the essential character of a private expense and are not generally considered to be a working or business expense.

In Case P90 82 ATC 431; (1982) 26 CTBR (NS) Case 24 ('Case P90'), the taxpayer was a ballet dancer who toured overseas and appealed against disallowed massage expenses. The ballet dancer made a submission that her body was a machine that performed the artistic income producing activity. The members of the Board applied the argument from Federal Commissioner of Taxation v. Finn (1961) 106 CLR 60; 12 ATD 348; 8 AITR 406, that the expenditure was incidental to the proper execution of her duties and that undergoing the massage treatment was a necessary part of her job.

In a letter, your doctor confirmed that due to your degenerative spinal condition, the massages were required for you to perform your role. Although your situation is not the same as the cases listed above, the principles are relevant. In your circumstances, the medical treatment was for your injury you sustained. Even though without this treatment you would not be able to carry out your daily duties, these expenses are not considered to be incurred in gaining your assessable income, but rather incurred in overcoming a medical condition. Although it may be inferred from this letter that the massage expenses may have been essential for you to carry out your labour intensive role in installing balustrade, the facts here are distinguished from Case P90 as it is not your body that earns Personal Services Income (PSI) per se, it is your skills in installing balustrade that allows you to do so.

The expenses are not sufficiently connected to your income earning activities as a professional. The massage therapy expenses are therefore private in nature and not an allowable deduction under section 8-1 of the ITAA 1997.

Deductibility of Massage Chair Expenses

Generally medical expenses have no direct connection to the gaining or producing of assessable income. The medical expense relates to a personal medical condition and is private in nature.

Taxation Ruling IT 2217 addresses income tax deductions for medical appliances. It refers to the decision in Case Q17 83 ATC 62, where the taxpayer was a primary producer who had purchased a hearing aid so that his business associates could communicate with him in the day to day running of the business. The taxpayer argued that their hearing aid was an essential tool to enable them to carry on their business.

The Board of Review disallowed the deduction. It was held that despite the connection between the outlay and the taxpayer's income, along with the fact that the taxpayer might be unable to earn his assessable income without the aid of the relevant appliance, the outlay was not necessarily incurred in carrying on a business for the purpose of gaining or producing assessable income. The primary cause of the expenditure was for the correction of a disadvantage that was personal to the taxpayer. The expense was therefore of a private nature.

Accordingly, claims for income tax deductions in respect of expenses incurred on medical appliances, for example, wheelchairs, hearing aids, spectacles, artificial limbs and similar appliances used by persons in carrying out their duties of an employment are not allowable.

In your case, you require massages to continue working after your series of spinal injections and oral medication only provide temporary relief and has been found to diminish your coherence in the workplace. Due to the costs of massages, you decided to purchase a massage chair that was found to provide the same relief as the message therapy. This has been confirmed by a letter from your doctor.

The massage chair you purchased is analogous to the hearing aid required by the primary producer in Case Q17 83 ATC 62, which allowed him to communicate in the day to day running of the business. Therefore, the expense of purchasing the massage chair could not be considered to be incurred in gaining assessable income but, rather, it would put you in a position where you would be able to work and therefore earn assessable income.

In light of the principles and facts outlined above, the costs of the massage chair are private in nature. The expenses are not considered to be incurred in gaining your assessable income, but rather incurred in overcoming a medical condition. Therefore, you are not entitled to claim a deduction under Section 8-1 of the ITAA 1997 for this expenditure, as it is private in nature.