Edited version of private advice

Authorisation Number: 1052262525573

Date of advice: 14 June 2024

Ruling

Subject: Work related expenses

Question

Are you entitled to a deduction for fitness gym equipment and fitness clothing?

Answer

No.

This ruling applies for the following period:

Year ended 30 June 2023

The scheme commenced on:

1 July 2022

Relevant facts and circumstances

You are employed by Employer Z.

You commenced duties with Employer Z a few years ago.

You are a permanent employee of Employer Z.

You underwent various tests conducted before employment. Once employed no further fitness testing is required.

You work a rotating roster.

In addition to your basic level of service, you perform capabilities as part of specialised team.

You became a member of the specialised team a few months after you began your employment.

You carry out specialised team duties when required.

You need to be equipped with the skills to work in remote areas.

These duties can involve extensive ground distances to be covered.

Team members are presented for medical assessment every couple of years which are not required at basic fitness levels.

You commenced your role in the specialist area duties team in the year following your assignment to the specialised team.

There is no further training or testing for the specialist area duty's role.

You have access to a gym at your workplace.

Your employer does not financially contribute to the costs of your fitness equipment and clothing.

You wish to claim fitness gym and equipment expenses as a deduction:

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 expenses to the extent 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.

A deduction will not be allowed under section 8-1 of the ITAA 1997 for expenses which are of a capital, private or domestic nature, where they lack sufficient nexus to income production, or if they are incurred in gaining or producing exempt income or where a provision of the tax law prevents it.

The High Court majority in Commissioner of Taxation v Payne [2001] HCA 3 said it is well established that these words are to be understood as meaning incurred 'in the course of' gaining or producing assessable income, and do not convey the meaning of outgoings incurred 'in connection with' or 'for the purpose' of deriving assessable income (Commissioner of Taxation v Day [2008] HCA 53).

The majority further stated that the meaning of 'in the course of' gaining or producing income was amplified in Ronpibon Tin NLv Commissioner of Taxation (Cth) [1949] HCA 15 where it was held that:

... to come within the initial part of [section 8-1] it is both sufficient and necessary that the occasion of the loss or outgoing should be found in whatever is productive of the assessable income, or if none be produced, would be expected to produce assessable income...

Taxation Ruling TR 2020/1 Income Tax: employees: deductions for work expenses under section 8-1 of the Income Tax Assessment Act 1997 notes in part:

16. For expenses incurred by employees, the fundamental question is whether an expense is incurred while earning employment income. This involves considering the proper scope of the particular taxpayer's work activities to determine if the circumstances of the expense have a sufficiently close connection to earning the employment income.

19. More difficult are cases where an expense ordinarily bears the characteristics of an everyday personal expense. Although generally not deductible, a deduction may be allowed if the employment context creates a close connection between the expenditure and the production of assessable income through work activities; that is to say, 'the occasion of the expenditure is to be found in the income-earning activity itself'

22. The requirement that expenses be incurred in the course of producing assessable income means that it is not enough to show only that there is some general link or causal connection between expenditure and the production of income. The expenditure must have a sufficiently close connection to performance of the employment duties and activities through which the employee earns income.

Even if the positive test of section 8-1 is satisfied, employees cannot claim deductions for outgoings that are private in nature. The term 'private' is not defined in the Act but has its ordinary meanings of 'personal'.

Except in very limited circumstances, gym fees and other fitness expenses (such as skipping ropes, weights and other fitness equipment) are private expenses. You can't claim a deduction for these expenses.

This is the case even if you're required to pass medical examinations and fitness tests to maintain your employment.

However, there are very limited circumstances where you can claim a deduction if your employment requires an extremely high level of fitness. This means strenuous physical activity is an essential and regular element of your work.

Regardless of your circumstances, you can't claim a deduction for conventional clothing you use in the course of keeping fit. This includes such things as tracksuits, running or aerobic shoes, socks, T-shirts, and shorts.

Generally, expenses incurred in the maintenance of physical fitness and wellbeing are not deductible as they are dependent on the employee's personal circumstances, to enable them to be sufficiently healthy to undertake both private and work activities. These expenses are everyday personal expenses and are not deductible. Similarly, an expense that restores standard health, comfort, and mobility after performing work activities does not have the requisite connection to producing income and is of a private character. Fitness related expenses can be deductible where a taxpayer is required to maintain a very high level of fitness as a necessary aspect of their work activities, well above the profession's general standard.

Application to your circumstances

As part of your requirements to be a part of the specialised team you are required to undertake a fitness test and medical examination every couple of years.

Your employer provides a gym for you to maintain your fitness.

While having your own equipment at home would be useful, it is not required in order for you to perform your duties.

You are not required to have a high level of physical fitness over and above that required for your employment on a regular basis.

The fitness equipment and clothing are therefore considered a private expense and are not incurred in relation to your employment as a fire fighter.

The fitness equipment and clothing are therefore not deductable under Section 8-1 of the ITAA 1997.