Massage expenses

Is the taxpayer entitled to a deduction under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) for the costs of reimbursing an employee for remedial massage expenses?

Yes, the taxpayer is entitled to a deduction under section 8-1 of the ITAA 1997 for the costs of reimbursing an employee for remedial massage expenses.

An employee of the taxpayer suffered a back injury whilst performing their duties for the taxpayer. The injury occurred whilst working with heavy machinery.

The employee has a remedial massage each month to relieve the pain caused by the injury. The taxpayer reimburses the employee for the cost of the massage.

Section 8-1 of the ITAA 1997 allows a deduction for all losses or outgoings to the extent that 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. However, no deduction is allowed to the extent that the losses or outgoings are of a capital, private or domestic nature or are necessarily incurred in gaining or producing exempt income.

The taxpayer reimburses expenses the employee incurs for remedial massages. The massages provide pain relief to the employee to allow them to continue working. The expenses have the essential character of an income producing expense. The expenses are incidental and relevant to the income producing activity and as such are deductible under section 8-1 of the ITAA 1997.