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Is the taxpayer, a workers compensation recipient, entitled to a deduction under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) for expenditure incurred in travelling to attend medical appointments?

No. The taxpayer, a workers compensation recipient, is not entitled to a deduction under section 8-1 of the ITAA 1997 for expenditure incurred in travelling to attend medical appointments as this is private expenditure.

The taxpayer is receiving weekly workers compensation payments as a result of a work related injury.

The taxpayer must travel to various medical appointments as directed by the workers compensation payer and is required by law to attend these appointments.

If the taxpayer does not attend the appointments, the weekly payments may cease.

The taxpayer incurs travel expenses in going to the appointments.

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

In order to satisfy the requirements of section 8-1 of the ITAA 1997 there must be a close and immediate connection between the income and the expenditure incurred. The expenditure must be incurred 'in the course of' gaining or producing the assessable income ( Lunney v. Federal Commissioner of Taxation (1958) 100 CLR 478).

The travel expenses incurred by the taxpayer in attending the medical appointments were not incurred in the course of gaining or producing the assessable income and therefore the taxpayer is unable to establish the required connection between the travel and the receipt of the compensation payments.

In addition, seeking medical treatment or advice is inherently a private matter and expenses that a taxpayer may incur in relation to seeking that treatment or advice are of a private nature. Private expenses such as these are excluded from a deduction that may otherwise be allowable under section 8-1 of the ITAA 1997.

Therefore the taxpayer is not entitled to a deduction for expenditure incurred in travelling to medical appointments under section 8-1 of the ITAA 1997.