Are you entitled to a deduction under section 8-1 of the income Tax Assessment Act 1997 (ITAA 1997) for the cost of a memberships/subscription fees to meditation apps, and the cost of a gym membership?
No. This ruling applies for the following periods: Year ending 30 June 20XX Year ending 30 June 20XX The scheme commenced on: 1 July 20XX
You are an individual support worker operating as a sole trader. You obtain work through online platforms. You provide care and support to clients with diverse and complex needs, including mental health conditions, intellectual disabilities and physical disabilities. Your role includes cooking, cleaning, shopping, gardening and assisting with mobility for elderly clients. You exercise at the gym with your clients. You clients can have challenging behaviours including violence and destruction. Your role can be physically and emotionally demanding. You work on your feet all day. You take on the difficulties and crises your clients experience. In the past X years, X of your clients have passed away, which has been traumatic for you. You have been seeing a psychologist to assist with the mental load of the work. You use a meditation app, and you are considering subscribing to another. These apps are personalised meditation programs that assist in winding down, reducing stress, and maintaining mental health. You use the apps to maintain your wellbeing and to continue supporting clients. The apps also help with work life balance. You also hold a gym membership.
One of your clients, has a health and activity plan that requires attendance at the gym about X times per week. You attend with them, as you are required to as part of their care plan, and in order to encourage their participation, you also engage in the exercises. The gym requires that you have a membership in order to participate. You haven't enquired about using a companion card at the gym, but have seen other support workers accompany clients without participating in the exercises. Additionally, your work generally requires physical strength, stamina, and fitness, which the gym supports. The gym membership is also used by you to maintain your physical fitness for your work.
Income Tax Assessment Act 1997 section 8-1
Subsection 8-1(1) of the ITAA 1997 states 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. If one of the positive limbs above are satisfied, then it is necessary to see if it is excluded by a negative limb in subsection 8-1(2) of the ITAA 1997. Subsection 8-1(2) of the ITAA 1997 states 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. Therefore, if a negative limb in subsection 8-1(2) of the ITAA 1997 excludes a deduction or loss, the deduction will be denied, regardless of the positive limb in subsection 8-1(1) of the ITAA 1997.
A number of significant court decisions have determined that for an expense to be an allowable deduction: • it must have the essential character of an outgoing incurred in gaining assessable income or, in other words, of an income-producing expense ( Lunney v. FC of T ; (1958) 100 CLR 478 ( Lunney's case )), • 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), and • it is necessary to determine the connection between the particular outgoing and the operations or activities by which the taxpayer most directly gains or produces his or her assessable income ( Charles Moore Co (WA) Pty Ltd v. FC of T , (1956) 95 CLR 344; FC of T v. Hatchett , 71 ATC 4184). Meditation apps
Meditation is the focusing of one's mind for a period of time, in silence or with the aid of chanting. It is a tool that is used to treat anxiety states, some forms of depression, stress-related conditions such as hypertension, and sometimes other physical conditions (Oxford Reference, 2025 www.oxfordreference.com). Generally, health-related expenses incurred to keep a taxpayer sufficiently healthy to be able to work and earn assessable income are not deductible as the expenses are considered to be of a private nature. This includes expenditure on all kinds of medical devices and treatments, such as sleep apnea machines, wheelchairs, hearing aids, etc - but also medical treatment for stress, such as meditation apps.
In Case QT94/45, a school principal sought to claim a deduction for the cost of visits to a doctor, therapist, psychiatrist and psychologist. The reason for the visits was that the taxpayer was having difficulties at work, causing stress and raising doubts about their professional capacity to continue as a school principal. The Administrative Appeals Tribunal decided that the essential character of the outgoings was expenditure incurred by the applicant to better equip herself in both a mental and physical sense for her duties as a school principal. The Tribunal found that they were neither relevant nor incidental to the applicant's income producing activity, stating that the outgoings were properly characterised as private expenditure and excluded from deduction. Application to your circumstances
In your case, you use the meditation apps to assist you with winding down, reducing stress and maintaining your mental health and wellbeing. Similarly to Case QT94/45, these expenses are incurred by you to better equip yourself in both a mental and physical sense so you can continue supporting your clients and are not incurred in gaining or producing your assessable income. Additionally, the expenses you have incurred for the meditation apps are private in nature as they are for your own health and wellbeing. Therefore, the meditation apps are private in nature and not deductible under section 8-1 of the ITAA 1997. Gym membership Except in very limited circumstances, gym fees and other fitness expenses are private expenses and can't be claimed as a deduction. The Commissioner generally takes the view that expenses incurred in keeping fit are inherently private in nature as it ultimately involves the person's own physical wellbeing. This position does not change even if the person is employed to undertake physical activity as part of their duties. Taxation Determination TD 93/114
Income tax: is a police officer, who is required to maintain an adequate level of physical fitness in order to undertake police duties, entitled to claim a deduction for fitness related expenditure (TD 93/114)states the following: 1. Where police duties do not require an officer to undertake regular strenuous physical activity, expenses of keeping fit are not deductible under subsection 51(1) of the Income Tax Assessment Act 1936 . This type of expense does not have the essential character of being incurred in the course of gaining or producing assessable income. 2. An employer's requirement that an employee incur expenditure which is not related to income-producing activities does not convert that expenditure into a deductible outgoing (per Hill J in FC of T v. Cooper 91 ATC 4396 at 4414; (1991) 21 ATR 1616 at 1636). Therefore, whilst Police Regulations may require an officer to remain in a physically fit condition, this does not mean expenditure related to keeping fit is allowable as an income tax deduction.
3. However, there may be circumstances where such expenditure by a police officer is an essential element of gaining income. This could occur in those occupations within the police force where strenuous physical activity by an officer is an essential and regular element of performing that officer's duties. It is considered a police academy physical training instructor may be in this category. Though TD 93/114 is about a police officer, the application of the law is the same. Unless a taxpayer's normal duties require an advanced (above and beyond normal) fitness level, deductibility of fitness related expenses will be denied. That is, expenses incurred in keeping fit (for example, gym memberships) will be considered of a private nature, unless strenuous physical activity is an essential and regular element of performing the employee's duties. Application to your circumstances We acknowledge that your duties generally require a degree of physical strength, stamina, and fitness. However, the level of fitness required is not comparable to that of a physical training instructor, as provided in TD 93/114. Rather, it aligns with maintaining a general standard of fitness.
While a gym membership may assist you in maintaining fitness for your role, this does not, in itself, mean that the expense was incurred in gaining or producing assessable income. Although you contend that attending the gym with your client is necessary to encourage and support their engagement in exercise, this does not make the gym membership an allowable deduction. You attend the gym as part of the client's care plan, and to encourage participation, you also engage in the exercises. However, participating in these exercises - and therefore holding a gym membership - is not considered essential to performing your duties as a support worker. There is an insufficient connection between the gym membership expense and the derivation of assessable income. Accordingly, the gym membership fees are private in nature and not deductible under section 8-1 of the ITAA 1997.