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ATO Interpretative Decision

ATO ID 2012/73 (Withdrawn)

Income Tax
Deductions: travel and accommodation related expenses incurred to obtain medical certificate when receiving workers compensation

Attention This ATO ID is withdrawn. Guidance relating to the issue addressed web content at Other travel expenses (QC 31982) and the principle is expressed at paragraphs 12 and 17 in Draft Taxation Ruling TR 2017/D6 Income tax and fringe benefits tax: when are deductions allowed for employees' travel expenses? .
Attention This document has changed over time. View its history.
FOI status: may be released
Status of this decision: Decision withdrawn 11 August 2017.

CautionCAUTION: This is an edited and summarised record of a Tax Office decision. This record is not published as a form of advice. It is being made available for your inspection to meet FOI requirements, because it may be used by an officer in making another decision.

This ATOID provides you with the following level of protection:

If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.


Issue

Where a taxpayer receiving workers compensation must provide a medical certificate at six monthly intervals to the paying authority as a condition of receiving payment, is the taxpayer entitled to a deduction for expenditure incurred in necessary travel to attend the medical appointments to obtain that certificate under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997)?

Decision

Yes. A taxpayer receiving workers compensation who must provide a medical certificate at six monthly intervals to the paying authority as a condition of receiving payment is entitled to a deduction for expenditure incurred in necessary travel to attend the medical appointments to obtain that certificate under section 8-1 of the ITAA 1997.

Facts

The taxpayer living in rural Australia is in receipt of weekly income replacement workers compensation payments as a result of a work related injury.

The taxpayer receives ongoing medical treatment locally.

The taxpayer is required under the relevant workers compensation legislation to provide a medical certificate at six monthly intervals to the paying authority, certifying a continued incapacity as a condition of receiving continued weekly income replacement workers compensation payments.

The medical certificate must be obtained from a medical practitioner approved under that legislation.

Weekly payments may cease if the medical certificate is not provided when required.

Every six months, the taxpayer travels by plane to attend appointments with the nearest approved medical practitioner to obtain the required medical certificate.

The taxpayer incurs travel expenses including accommodation to attend the medical appointments.

Reasons for Decision

Section 8-1 of the ITAA 1997 broadly allows a deduction for any losses or outgoings to the extent to which they are incurred in gaining or producing assessable income except to the extent outgoings are of a capital, private or domestic nature.

A number of significant court decisions have determined that, for an expense to satisfy the tests in section 8-1 of the ITAA 1997, it must have the essential character of an outgoing incurred in gaining assessable income ( Lunney v. FC of T, Hayley v. FC of T (1958) 100 CLR 478; (1958) 11 ATD 404; (1958) 7 AITR 166) and 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; (1949) 8 ATD 431; (1949) 4 AITR 236).

The requirement for the taxpayer to provide a medical certificate at regular intervals to the paying authority to ensure the continued receipt of workers compensation payments, is analogous to the activity test considered by the High Court in Federal Commissioner of Taxation v. Anstis (2010) 241 CLR 443; (2010) 2010 ATC 20-221; (2010) 76 ATR 735 (Anstis).

In the taxpayer's case, the travel by plane to attend appointments is a necessary part of obtaining the required medical certificate to maintain the taxpayer's statutory entitlement to workers compensation payments. The travel expenses are incurred in maintaining the entitlement to income by satisfying the specific requirements of the workers compensation legislation and are therefore incurred in gaining or producing the assessable workers compensation payments. Analogous to Anstis, the expenses are necessary costs to satisfy the required conditions of income and therefore have the 'essential character' to be deductible under section 8-1. Accordingly, the travel and accommodation related expenses incurred by the taxpayer acquiring medical certificates to retain continued workers compensation payments are deductible under section 8-1 of the ITAA 1997.

Note 1 : Travel expenses incurred in attending appointments for medical treatment as part of rehabilitation are considered to be private in nature and not deductible .

Note 2 : Apportionment may be necessary if travel expenses also have a private purpose. See paragraphs 17 and 63 to 70 of Taxation Ruling TR 98/9 .

Note 3 : Where a workers compensation authority reimburses reasonable travel expenses and the expenses are deductible to the taxpayer, the amount reimbursed may be included in the taxpayer's assessable income under section 20-20 of the ITAA 1997 .

Date of decision: 29 August 2012

Year of income:Year ending 30 June 2013

Legislative References:
Income Tax Assessment Act 1997
   section 8-1
   section 20-20

Case References:
FC of T v. Anstis
   (2010) 241 CLR 443
   (2010) 2010 ATC 20-221
   (2010) 76 ATR 735

Lunney v. FC of T, Hayley v FC of T
   (1958) 100 CLR 478
   (1958) 11 ATD 404
   (1958) 7 AITR 166

Ronpibon Tin NL and Tongkah Compound NL v. Federal Commissioner of Taxation
   (1949) 78 CLR 47
   (1949) 8 ATD 431
   (1949) 4 AITR 236

Related Public Rulings (including Determinations)
Taxation Ruling TR 98/9

Keywords
Accommodation expenses
Deductions & expenses
Travel expenses

Siebel/TDMS Reference Number: 1-3ZQNR33;1-BKTW301

Business Line: Small Business/Individual Taxpayers

Date of publication: 31 August 2012

ISSN: 1445-2782

ATO ID 2012/73 (Withdrawn) history   Top  
   Date   Version 
   29 August 2012   Original statement   
 You are here ®  11 August 2017   Withdrawn   


 


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