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ATO stands by ruling despite gym deduction win

But a successful claim by a prison dog handler could “open the floodgates”.

Tax&Compliance Philip King 22 April 2022
— 2 minute read

The ATO said there is no need to revise its ruling on the deductibility of gym memberships despite the AAT upholding a claim by a prison dog handler that was initially denied by the office.

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But the general manager of technical policy at the IPA, Tony Greco, said the win “could open the floodgates for future claims” for many who require a high level of fitness for work.

The AAT upheld the taxpayer’s deduction for three gym memberships costing $1,859 while he was employed as a dog handler in the special operations unit of the South Australian Department of Correctional Services.

The claim was one of many contested by the taxpayer in London and Commissioner of Taxation (Taxation) [2022] earlier this month.

The AAT said it was satisfied that the memberships were all taken out with a view to the taxpayer maintaining a high level of fitness for his work.

In its ruling the AAT said: “It is clear on the evidence before me that Mr London is required to maintain a high degree of anaerobic fitness (that is, a degree of muscle strength sufficient to control a large German shepherd on a lead in a volatile situation) and a high degree of aerobic fitness (that is, a degree of speed and agility sufficient to enable him to move effectively with, and control and direct, his dog in an emergency). He must also be prepared to restrain prisoners himself.”

It said an apportionment of the expenses between work and private use was not required as the evidence did not establish that the taxpayer’s use of the gyms reflected a personal desire to be extremely fit (apart from any work-related purpose).

The applicable Tax Office Ruling TR 95/113 allows a deduction for fitness expenses incurred by police officers, including “members of special emergency squads, diving squads, and police officers who work regularly with police dogs and train them”, who can demonstrate that their job demands a high level of physical fitness.

The AAT found no reason why the views expressed in the ruling should not extend to correctional services officers who were members of emergency response groups and train and control dogs.

However, an ATO spokesperson said the decision did nothing to change its view on deductibility of gym membership costs, which are allowed “in very limited circumstances, where your role requires you have an extremely high level of fitness”.

“This will be the case where your role requires you to both: maintain an extremely high level of fitness well above the general occupation standard; perform ongoing strenuous physical activities as an essential and regular part of your role,” the ATO said.

“To claim a deduction for fitness expenses, individuals will need to demonstrate that their employment duties meet both of these requirements.”

But Mr Greco said the case had wider ramifications.

“I can see application to many other occupations requiring high levels of physical fitness,” he said.

“It could open the floodgates for future claims – particularly as our current tax deductibility rules do not require 100 per cent work purpose allowing apportionment in cases where expenses are not predominantly for work-related purposes.

“It might provide impetus to other occupations that require high levels of physical strength and/or fitness for predominantly work-related purposes to also make a case for deductibility of gym memberships.”

ATO stands by ruling despite gym deduction win
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Philip King

Philip King

Philip King is editor of Accountants Daily and SMSF Adviser, the leading sources of news, insight, and educational content for professionals in the accounting and SMSF sectors.

Philip joined the titles in March 2022 and brings extensive experience from a variety of roles at The Australian national broadsheet daily, most recently as motoring editor. His background also takes in spells on diverse consumer and trade magazines.

You can email Philip on: This email address is being protected from spambots. You need JavaScript enabled to view it.

Tax&Compliance