Edited version of private advice

Authorisation Number: 1052211942159

Date of advice: 17 January 2024

Ruling

Subject: Deductions - gym membership

Question

Are you entitled to claim a deduction for the gym membership fees incurred under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997)?

Answer

No.

This ruling applies for the following period:

Year ended 30 June 20XX.

The scheme commenced on:

1 July 20XX.

Relevant facts and circumstances

You are employed as a fulltime Beach Lifeguard (Lifeguard) for XXXX Beaches Council (your employer).

The position description provided states your role, key and operational responsibilities and fitness requirements.

Role Purpose

To maximise the enjoyment and safety of beach and beach reserve users by providing an effective and consistent system of beach management, including implementation of Council's potential beach and beach reserve liabilities by providing a Beach Lifeguard service on designated beaches during the swimming season. The Lifeguard is responsible for supervising Lifeguards and monitoring changing beach conditions.

Key Responsibilities

•         Be responsible for the overall day to day management of a designated beach and beach reserve

•         Undertake day to day Beach Services administration tasks including, but not limited to:

o   maintain accurate records of day-to-day management of the beach and beach reserve

o   record major incidents and accidents

o   complete daily, weekly and other reports relating to major incidents and accidents

o   report hazards that could potentially cause injury or harm to beach users

o   carry out visual observations to monitor and report pollution on Council's beaches and advise the Communications Officer of daily beach conditions

o   monitor staff levels and changing beach conditions

•         Coordinate and participate where necessary and/or appropriate to life threatening, emergency rescue situations and/or serious emergencies.

•         Administer first aid assistance and carry out resuscitation where required

•         Operate within guidelines set out in Council's Beach Services Operations Manual.

•         Establish and maintain effective communication with beach user groups to ensure the smooth operation and management of a beach location.

•         Assist in the coordination of special events on Council's Beaches and adjacent Reserves.

•         Assist in the resolution of customer requests, issues and complaints in an appropriate manner

•         Through direct contact, educate the general public visiting the beach on surf safety and awareness and Council policies and regulations.

•         Maintain a positive image for Council and its Beach Lifeguard service.

•         Assist Beach Services Coordinators by undertaking delegated responsibilities.

•         Enforce Council policies and regulations concerning the Local Government Act 1993 and related Acts pertaining to the use of the beach and beach reserve.

•         Report to Beach Services Co-ordinators any incidents outside of normal procedures or Council Policy.

Operational

•         Ensure compliance with Council processes and procedures and those specific to the Beach Services Operation

•         Liaise with the public and external groups/organisations

•         Build and maintain productive relationships with internal and external stakeholders

•         Gain an understanding of the political process and political environment at Council and manage relationships

•         Ensure effective probity and anti-corruption measures in dealing with contacts

•         Ensure compliance with relevant federal, state, local and statutory regulations including the requirements of the Code of Conduct, Equal Employment Opportunity (EEO) principles, the Work Health and Safety (WHS) Act, the Local Government Act and the requirements of ICAC

•         Learn, promote and ensure compliance with Work Health and Safety policies and procedures

•         Provide detailed, easily accessible information of relevant WHS policies and procedures to the team

•         Document and communicate WHS issues to the Manager

Physical Fitness Requirements

•         800m pool swim within 14 minutes

•         Complete a Lifeguard Mission consisting of a continuous 800 Metre Run, 500 Metre Swim, 800 Metre Run and a 600 Metre Board Paddle whilst negotiating the surf break

•         Board rescue

•         Rescue tube swim

•         Simulated rescue and resuscitation

•         Written examination covering: Beach management, Marine safety, Communications, First aid and Resuscitation

Employees can be asked to perform this fitness test at any time, usually once per month.

To maintain your fitness level, you do three personal training sessions a week which costs you $XXX (per week).

Your employer does not supply you with a gym nor do they reimburse you any gym membership expenses.

You are also trained in the following skills:

•         water rescue,

•         breathing apparatus operations, and

•         floods.

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 a loss and outgoing to the extent that it is incurred in gaining or producing assessable income. However, a loss or outgoing is not deductible if it is of a capital, private or domestic nature, or it is incurred in gaining or producing exempt income.

A number of significant court decisions have determined that for an expense to be an allowable deduction:

•         it must have the essential character of an outgoing incurred in gaining assessable income or, in other words, of an income-producing expense (Lunney v. FC of T; (1958) 100 CLR 478 (Lunney's case)),

•         there must be a nexus between the outgoing and the assessable income so that the outgoing is incidental and relevant to the gaining of assessable income (Ronpibon Tin NL v. FC of T, (1949) 78 CLR 47), and

•         it is necessary to determine the connection between the particular outgoing and the operations or activities by which the taxpayer most directly gains or produces his or her assessable income (Charles Moore Co (WA) Pty Ltd v. FC of T, (1956) 95 CLR 344; FC of T v. Hatchett, 71 ATC 4184).

The Commissioner generally takes the view that expenses incurred in keeping fit are inherently private in nature as it ultimately involves the person's own physical wellbeing. This position does not change even if the person is employed to undertake physical activity as part of their duties.

Taxation Ruling TR 95/17 Income tax: employee work-related deductions of employees of the Australian Defence Force discusses the deductibility of fitness related expenses for Australian Defence Force (ADF) members. TR 95/17 states that a deduction is not allowable for fitness expenses in maintaining a general standard of fitness expected of an ADF member as such expenses are generally private in nature. However, a deduction is allowable for these costs if the ADF member can demonstrate that strenuous physical activity is an essential and regular element of his or her income earning activities and that these costs were incurred to maintain a level of fitness well above the ADF general standard.

An example provided in TR 95/17 refers to a member of the Special Air Services Regiment (SAS) who is paid to maintain the very highest level of fitness, and plainly differentiates between the level of fitness required of a SAS member and that of other ADF members.

The principle outlined in TR 95/17 is that unless a taxpayer's normal duties require an advanced (above and beyond normal) fitness level, deductibility of expenses will be denied. That is, expenses incurred in keeping fit (for example, gym memberships) are generally considered to be of a private nature, unless strenuous physical activity is an essential and regular element of performing the employee's duties.

Taxation Determination TD 93/114 Income tax: is a police officer, who is required to maintain an adequate level of physical fitness in order to undertake police duties, entitled to claim a deduction for fitness related expenditure states that where police duties do not require an officer to undertake regular strenuous physical activity, expenses of keeping fit are not deductible. This type of expense does not have the essential character of being incurred in the course of gaining or producing assessable income. Whilst Police Regulations may require an officer to remain in a physically fit condition, this does not mean expenditure related to keeping fit is allowable as an income tax deduction.

In this case, we acknowledge that your duties require you to maintain a certain level of fitness.

However, the level of fitness required is not at a level comparable to that of a physical training instructor or an officer in special combat, it is comparable though to maintaining a general standard of fitness expected as a member of the Defence Force or a member of the Police Force.

Although you are required to be fit, the level of fitness required cannot be considered to be at the highest level nor at a level which makes it an essential and a regular element of your employment given the varied nature of your responsibilities.

There is an insufficient connection between the fitness expenses and the derivation of assessable income.

Whilst expenses may benefit and help keep the taxpayer fit, this does not in itself mean that the expenditure was incurred in gaining or producing assessable income.

Your gym membership fees are more private in nature.

Therefore, you are not entitled to a deduction for the gym membership fees incurred under section 8-1 of the ITAA 1997.