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Are you entitled to a deduction under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) for the cost of a second pair of glasses which are a work requirement written on your marine pilot licence?

Summary No. Section 8-1 of the Income Tax Assessment Act 1997 (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, or relate to the earning of exempt income. Generally medical expenses have no direct connection to the gaining or producing of assessable income. The medical expense relates to a personal medical condition and is private in nature. This ruling applies for the following period: XX XX 20XX The scheme commenced on: XX XX 20XX

You are a licenced marine pilot. It is a condition on your marine pilot licence you carry two pair of glasses when undertaking your work. You provided a copy of your marine pilot licence. The condition to carry two pair of glasses is written on your marine pilot licence. You acquired your marine pilot licence on XX X 20XX. You have a pair of multi-focal glasses specifically used for rapid switching between looking at close up navigation equipment, and distant targets out the window for collision avoidance without having to remove the glasses. You carry reading glasses as the second pair required by your licence. The reading glasses are less efficient, particularly at night, due to the continual need for near/far distance vision switching. The reading glasses are the only pair you use privately. Both pair of glasses were purchased on XX X 20XX.

Income Tax Assessment Act 1997 section 8-1

Subsection 8-1(1) of the ITAA 1997 states that you can deduct from your assessable income any loss or outgoing to the extent that: (a) it is incurred in gaining or producing your assessable income; or (b) it is necessarily incurred in carrying on a *business for the purpose of gaining or producing your assessable income. However, subsection 8-1(2) of the ITAA 1997 states that you cannot deduct a loss or outgoing under this section to the extent that: (a) it is a loss or outgoing of capital, or of a capital nature; or (b) it is a loss or outgoing of a private or domestic nature; or (c) it is incurred in relation to gaining or producing your *exempt income or your *non-assessable non-exempt income; or (d) a provision of this Act prevents you from deducting it. The Commissioner published a Taxation Ruling IT 2217 Income tax deductions: medical appliances

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. Taxation Ruling IT 2217 Income tax deductions: medical appliances , provides at paragraphs 4 to 7:

4. Although Australian income tax law differs from that in the United Kingdom the reasoning adopted by the Court of Appeal i the above quoted case is followed in Australia. Thus, in Hayley and Lunney v. FCT (1958) 100 CLR 478, the High Court held that the cost of travel to and from work was not an allowable income tax deduction. Similarly in Lodge v. F.C. of T. 72 ATC 4174, (1972) 3 ATR 254, the High Court held that child minding expenses were not an allowable income tax deduction. In both the cases the Court recognised that the expenditures were incurred for the purpose of earning assessable income and were an essential prerequisite to the derivation of that income. However, the expenditures were not incurred in the actual gaining of the assessable income and, for that reason, did not qualify for income tax deduction.

5. The same reasoning applies to expenses associated with the provision and maintenance of medical appliances. Claims for income tax deduction in respect of medical appliances have been considered by Taxation Boards of Review on a number of occasions. In Case P31 82 ATC 141; Case 96 25 CTBR (NS) 715, a quadriplegic law lecturer was not allowed an income tax deduction for depreciation, maintenance and insurance on a motorized wheelchair which he used 75% of the time in connection with his employment. Similarly, in Case Ql7 83 ATC 62; Case 82 26 CTBR(NS) 556, a farmer was denied the cost of a hearing aid which he claimed was an essential tool in carrying on his business.

6. In both cases the Board found that the sole purpose of the wheelchair or hearing aid was to aid the taxpayer in overcoming his personal disability in order that he could earn his assessable income. The Board 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. 7. The principles emerging from the various decisions apply to similar situations where taxpayers are required to use some type of medical device or surgical appliance to overcome a physical disability. Accordingly, claims for income tax deductions under sub-sections 51(1), 53(1) and 54(1) 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. These classes of expenditure would normally qualify as medical expenses for concessional expenditure rebate purposes.

Application to your circumstances The expense of purchasing the glasses could not be considered to be incurred in gaining assessable income but, rather, it would put you in a position where you would be able to work for your employer and therefore earn assessable income. The costs of the spectacles are private in nature. The expense is incurred in overcoming a medical condition. The fact that the glasses which are a work requirement written on your marine pilot licence 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.