Edited version of private advice

Authorisation Number: 1052366449230

Date of advice: 10 March 2025

Ruling

Subject: Deductions

Question 1

Are you entitled to a deduction under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) for the medical procedure expense?

Answer

No.

Question 2

If no, could a portion of the expense be claimed?

Answer

No.

Summary

You are not entitled to deduction, as the medical procedures are private in nature.

This ruling applies for the following periods:

1 July 20YY to 30 June 20YY

The scheme commenced on:

1 July 20YY

Relevant facts and circumstances

Over many years you have been a XXXX. Marketing and publicity are essential components of your activity. You have endured a medical issue which interfered with your quality of life, and your ability to concentrate on earning as a XXXX.

You had a medical procedure and had appliances fitted. The outcome of the medical procedure has provided you with a good outcome. You have overcome your medical issue and you now feel confident to XXXX in public. You provided a statement from your medical specialist.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 8-1

Reasons for decision

For a deduction to satisfy the requirements of section 8-1 of the ITAA 1997, the expense must have the essential character of an outgoing incurred in gaining assessable income or, in other words, of an income producing expense. To claim a deduction the expense must be incurred in earning your assessable income. You cannot claim an expense that is capital, private or domestic in nature.

Generally, medical expenses have no direct connection to the gaining or producing of assessable income. The Commissioner published a Taxation Ruling IT 2217 Income tax deductions: medical appliances (IT 2217) which explains that medical expenditure is not an allowable deduction where a taxpayer is required to use some type of medical appliances or surgical appliance to overcome a physical disability. This would include wheelchairs, hearing aids, spectacles, artificial limbs, and similar appliances used by a taxpayer in carrying out their duties.

The IT 2217, at paragraph 5 states a case where a quadriplegic law lecturer had a deduction disallowed 'for the depreciation, maintenance and insurance on a motorized wheelchair which he used 75% of the time in connection with his employment.' Another case mentioned in the IT 2217 at paragraph 5, 'a farmer was denied the cost of a hearing aid which he claimed was an essential tool in carrying on his business.' In these cases, at paragraph 6 of IT 2217, the Taxation Board of Review 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.

At paragraph 7 of IT 2217 it states:

... claims for income tax deductions...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.

Taxation Ruling TR 95/20 Income tax: employee performing artists - allowances, reimbursements and work-related expenses (TR 95/20) provides the Commissioners' view on the expenses that are allowable as a deduction to a musician, actor, variety artist, or singer. At paragraph 109 it says 'a deduction is not generally allowable for grooming expenses such as hairdressing, make-up or facials'. You can claim a deduction for the cost of a particular hairstyle or length of hair if it is for a particular role or as part of a costume for purposes of continuity. Also a deduction can be claimed for the cost of stage make-up.

In the example in paragraph 111 of TR 95/20, an actor obtained a role in a stage play. He was required to have his normally shoulder length hair cut short and maintained that way, as part of his costume, for the duration of the play. The actor supplied his own make-up to wear on the stage. The actor can claim a deduction for the cost of the haircut and the make-up as there is a direct connection between the expense and the actor's income-earning activities.

In TR 95/20, at paragraph 110, an expense was not deductible for maintaining a public image, as shown in the example of an actress in a television series. She tried to claim her regular hair styling and beauty treatments 'to present a well-groomed image to the public'. These expenses are classed as personal care, private in nature and not allowable as a deduction.

In Taxation Ruling TR 95/15 Income tax: nursing industry employees - allowances, reimbursements and work-related deductions (TR 95/15) at paragraph 91, a nurse tried to claim the expense of their compression stocking on the grounds that they were prescribed by a medical practitioner to assist in overcoming a medical condition. The purchase of the stockings was classed as private in nature and was not incurred in earning her assessable income as a nurse.

In your case your issue affected your XXXX skills. Your reasons for undertaking the procedures were similar to those in the examples in paragraph 5 of IT 2217. Now that you have overcome your problems, you now feel confident to XXXX in XXXX. However, as outlined at paragraph 7 of IT 2217, claims for tax deductions in respect of expenses incurred on medical appliances used by taxpayers in their personal life, as well as to carry out their income earning duties, are not allowable as a deduction. They are a private expense.

We acknowledge that your issue hindered your performance which is crucial in your profession. However, the fact that you are better able to earn your assessable income because of the medical appliance does not alter the essential character of the expense. That is the expense being a medical expense which is private in nature. Consequently, the expenditure is not deductible under section 8-1 of the ITAA 1997.