TAXATION - Private ruling - whether medical expenses deductible - whether medical expenses incurred in gaining or producing assessable income - whether medical expenses of a private or domestic nature - applicant's only assessable income was total and permanent disablement pension - reviewable objection decision affirmed

Administrative Review Tribunal Act 2024 (Cth) ss 54, 106

Income Tax Assessment Act 1997 (Cth) ss 8-1, 995-1

Taxation Administration Act 1953 (Cth) s 14ZZK, Sch 1, ss 357-105, 357-115, 359-5, 359-65

Commissioner of Taxation v Eichmann (2019) FCA 2155

Commissioner of Taxation v Payne [2001] HCA 3; (2001) 202 CLR 93

Federal Commissioner of Taxation v Anstis [2010] HCA 40; (2010) 241 CLR 443

Re Cooper Bros Holdings Pty Ltd trading as Triple Waste Management and Commissioner of Taxation (2013) AATA 99

Ronpibon Tin NL v Federal Commissioner of Taxation [1949] HCA 15; (1949) 78 CLR 47

Rosgoe Pty Ltd v Commissioner of Taxation (2015) FCA 1231

The Public Servant and Commissioner of Taxation (2014) AATA 247

Taxation Ruling IT 2217 Income tax deductions: medical appliances

1. Mr Wannberg applied for a private ruling from the Commissioner of Taxation in relation to the deductibility of medical expenses to be incurred, estimated to be approximately $100,000 in the income year ended 30 June 2024. The Commissioner of Taxation issued a private ruling addressed to Mr Wannberg stating that the medical expenses were not deductible (Private Ruling). The Commissioner relied on s 8-1 of the Income Tax Assessment Act 1997 (Cth) (ITAA 1997). Mr Wannberg objected to the unfavourable Private Ruling. The Commissioner subsequently disallowed Mr Wannberg's objection (Decision). As Mr Wannberg was dissatisfied with the Decision, he applied to the Administrative Appeals Tribunal (AAT) for review.[1]
2. The sole issue before the Tribunal is whether the Commissioner's view of the law as to the deductibility of medical expenses in the circumstances of Mr Wannberg's 'specified scheme' in the Private Ruling should have been made differently. Mr Wannberg, as the taxpayer, has the burden of proof: s 14ZZK(b)(iii) of the Taxation Administration Act 1953 (Cth) (TAA).
3. For the reasons explained below, I have decided that the Private Ruling is correct and, therefore, the medical expenses are not deductible.

1. It is appropriate to start by setting out the details relating to Mr Wannberg's application for a private ruling.
2. On or about 7 February 2024, Mr Wannberg lodged an application for a private ruling with the Australian Taxation Office (ATO) by completing an ATO form titled 'Private ruling application' in which he stated under the heading 'Question' in the ATO form, as follows:

Can I please have my taxable income reduced/adjusted to enable greater access to medical treatment that comes at the projected cost of more than $98,000 at this stage?[2]

3. Under the heading 'Relevant facts and circumstances' in the ATO form, Mr Wannberg stated:

Please note medical certificates and that I am unfit to speak on the phone. Please respond via email to [Redacted] > > Further to my previous requests for a change in child support assessment due to special circumstance (CSA Act section 4(2)(a), section 117(2)(iii)(A), I am concerned that you are only considering my taxable income rather than my exceptional and out of the ordinary circumstances. > > For now, Reason 7 of 2.6.13 re necessary commitments of self-support appears mostly applicable- astronomical medical expenses in response to the certified abuse suffered from the other parent, has a severely adverse impact on my capacity to pay child support in addition to the day to day financial support inherent in no less than 50% shared care. > > Any continued child support liability is no longer just nor equitable but in fact utterly improper. > > My capacity to lend financial support to the other parent has been abused (as per medical certificate) for 14! Years already... > > The unusual nature of this case is also highlighted in my application for criminal injuries compensation... > > I am in receipt of an invalidity pension (TPD) due to the disablement caused by the other parent... My income should be completely exempt really... [Redacted].[3]

4. On 8 February 2024, an ATO officer wrote to Mr Wannberg introducing herself as the case officer actioning his application and suggested, amongst other things, that the ruling question for the Commissioner to rule on be "Can I claim a deduction for my medical expenses?" The ATO officer also provided information to the effect that there are no special circumstances provisions in the income tax legislation that provide the Commissioner with a discretion to reduce a taxpayer's taxable income and, further, that personal and private expenses are generally not deductible.[4]
5. On 8 February 2024, Mr Wannberg emailed the ATO officer twice with further information. In his first email, he attached four documents. The first document titled 'Appendix: Breakdown of Costings' was written in the third person and stated that "[t]he minimum out of pocket costs of treatment for Mr Jan Wannberg's escalating condition/s are now in excess of $98,000 per year, and likely to grow much further as additional co-morbidities are being aggravated... In consultation with various health benefit funds, hospital administrators, treating physicians, and allied health professionals and clinicians, Jan's projected minimum annual medical costs include but are not limited to: ..."[5] A table of various estimated medical expenses totalling $98,624 was included (Medical Expenses).[6] The table is reproduced at [12] below under the terms of the Private Ruling. The second attachment titled 'In Brief re Comorbidities and Cardiovascular Risk with Impending Mortality' referenced Mr Wannberg's various health conditions and legal proceedings.[7] The third attachment was Mr Wannberg's PAYG payment summary for the year ending 30 June 2023 issued by the Commonwealth Superannuation Corporation.[8] It referred to Mr Wannberg receiving a defined benefit superannuation income stream and tax having been withheld. Attachment 4 was a table of average dental fees charged by dental general practitioners and information about other treatments such as transcranial magnetic stimulation.[9]
6. In his second email to the ATO officer dated 8 February 2024, Mr Wannberg stated that he had been terminated from employment due to total and permanent disablement (TPD) and that the medical treatments were directly relevant to his forced retirement on medical grounds.[10] He also stated that his chief concern was the 100% deductibility of his medical treatments. The attachments provided by Mr Wannberg with the second email were an 'Application for criminal injuries compensation' dated 29 December 2023 and, in addition, a letter from a doctor dated 1 December 2023 which contained the opinion that Mr Wannberg's "total and permanent disablement are directly linked to his documented experiences of emotional and financial abuse."[11]
7. On 13 February 2024, the ATO officer emailed Mr Wannberg and relevantly stated that, having reviewed the information provided by him, the question to be ruled on by the Commissioner was "Can you claim deductions for the proposed medical expenses to reduce your taxable income?" The ATO officer also foreshadowed that the answer would be "No". Additionally, the tax officer set out an explanation referring to s 8-1 of the ITAA 1997 and extracts from Taxation Ruling IT 2217 Income tax deductions: medical appliances.[12]
8. On 21 February 2024, Mr Wannberg emailed the ATO officer. He relevantly stated "[p]lease proceed for a ruling."[13]
9. On 27 February 2024, the Commissioner made the Private Ruling.[14] The Private Ruling stated as follows:

Notice of private ruling > > This private ruling applies to: > > Client Name > > Mr Jan E Wannberg > > Authorisation Number: [Redacted] > > Question 1 > > Can you claim a deduction for your medical expenses? > > Answer > > No > > This private ruling applies for the following period: > > Year ending 30 June 2024 > > The scheme commenced on: > > 1 July 2023 > > Relevant facts and circumstances > > This private ruling is based on the facts and circumstances set out below. If your facts and circumstances are different from those set out below, this private ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling. > > You have a medical condition. > > You require medical treatments, with estimated minimum costs, of:

Psychotherapy (outside of residential care but including

You are not employed.

You do not carry on business.

Your only income is a total and permanent disability pension.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 8-1

1. The Commissioner separately provided reasons for his decision, but they are not part of the Private Ruling.
2. On 28 February 2024, Mr Wannberg objected to the Private Ruling, broadly asking for the matter to be escalated at the ATO on the basis that he had already provided medical evidence.[15] On 3 May 2024, Mr Wannberg's objection to the Private Ruling was considered valid by the Commissioner following Mr Wannberg providing a signed declaration.[16]
3. On 24 May 2024, the Commissioner made the Decision.[17] The Commissioner disallowed Mr Wannberg's objection on the basis that the Medical Expenses were not incurred in relation to gaining or producing his assessable income and were private or domestic in nature.
4. On 4 June 2024, Mr Wannberg applied to the AAT seeking review of the Decision.[18]
5. On 18 September 2024, there was a conference before a Registrar at the AAT. Subsequently, on 24 September 2024, the Registrar made directions by consent of the parties for the filing of Statements of Facts Issues and Contentions, amongst other things, and for the matter to be determined without holding a hearing. This was considered appropriate in circumstances where the issue for determination in the proceeding - the correctness of the Private Ruling - can be determined in the absence of the parties.
6. On or about 6 May 2025, the matter was constituted to be heard on the papers by a Tribunal member: see ss 106(1) and (2) of the Administrative Review Tribunal Act 2024 (Cth). Unfortunately, that member had to take unexpected personal leave and on or about 22 August 2025, the matter was reconstituted to me.

THE RELEVANT STATUTORY PROVISIONS AND PRINCIPLES

1. As the decision under review is an objection decision to a private ruling, it is necessary to briefly refer to the law relating to the Tribunal's jurisdiction in this proceeding about the review of a Decision concerning a ruling made by the Commissioner. This is followed by a review of the income tax law relating to the deductibility of medical expenses.
2. By way of background, s 359-5(1) of Schedule 1 to the TAA provides that the Commissioner may, on application, make a private ruling on the way in which the Commissioner considers a relevant statutory provision applies or would apply to an applicant in relation to a specified scheme. Such a ruling is called a 'private ruling'. A private ruling must identify the entity to whom it applies and specify the scheme and the relevant provision to which it relates:

s 359-5(2). A private ruling is therefore confined to a consideration of the 'scheme' identified in the private ruling. 'Scheme' is defined in s 995-1 of the ITAA 1997 to mean any arrangement or any scheme, plan, proposal, action, course of action or course of conduct, whether unilateral or otherwise. It is the 'specified scheme', namely, that identified by the Commissioner in the private ruling, that is important. 3. Section 357-105 of Schedule 1 to the TAA provides that if the Commissioner considers further information is required to make a private ruling, the Commissioner must request that the applicant give that information to him. In considering an application for a private ruling, the Commissioner may consider additional information provided by the applicant after the application was made (whether in response to a request under s 357-105 or otherwise):

s 357-115. In the present case, as noted above, the ATO officer requested further information and that was considered in the Private Ruling. For example, the table of Medical Expenses referred to above was provided following the application and was incorporated in the Private Ruling, as were the facts evident from Mr Wannberg's PAYG summary that he was not employed, and receiving a TPD pension. 4. In Re Cooper Bros Holdings Pty Ltd trading as Triple Waste Management and Commissioner of Taxation [2013] AATA 99 (Cooper Bros), Deputy President Alpins explained the Tribunal's role in reviewing objection decisions with respect to private rulings. The following extracts from Cooper Bros are relevant:

6. As the prefatory provision of Div 359 (s 359-1) explains, "[a] private ruling is an expression of the Commissioner's opinion". As that opinion concerns a particular question about the application of tax law to the facts identified in the ruling comprising the specified scheme, the Tribunal's jurisdiction is therefore limited to a review of the Commissioner's opinion on that same question. The question before the Tribunal is whether the Commissioner's opinion was correct (Federal Commissioner of Taxation v McMahon and Another [1997] FCA 1087; (1997) 79 FCR 127 at 132-134, 140-141, 149-150; Federal Commissioner of Taxation v Reef Networks Pty Ltd [2004] FCAFC 275; (2004) 57 ATR 375 at [6]; Lamont v Federal Commissioner of Taxation [2005] FCA 513; (2005) 144 FCR 312 at 319; Cooperative Bulk Handling Ltd v Federal Commissioner of Taxation [2010] FCA 508 at [13], [15][16]). The answer to that question therefore depends upon the scheme on which the ruling is founded - the Tribunal's review turns on the specified scheme just as the ruling did. > > 7. As Lockhart J said in McMahon at 133, quoted with approval by the Full Federal Court in Hastie Group Ltd v Commissioner of Taxation [2008] FCAFC 187; (2008) 172 FCR 496 at [3]: > > When making a private ruling the Commissioner does not make findings of fact. He simply identifies facts and then states his opinion about the way in which the relevant tax laws apply to the applicant in relation to those identified facts... > > 8. That being so, the Tribunal cannot make findings of fact in this proceeding. The Tribunal can only consider the stated facts comprising the scheme the subject of the ruling. Furthermore, the Tribunal cannot "redefine" the scheme (see McMahon at 133, 141, 144-146, 150) - the Tribunal is confined by the scheme as it has been described in the ruling and cannot depart from that description in any respect. The Tribunal cannot create its own description of the scheme, elaborate upon or make assumptions about the scheme, nor can the Tribunal add further facts, substitute other facts or otherwise alter the scheme ... > > (bolding is emphasis added)

5. It follows, as in the Cooper Bros case, that the Private Ruling is the relevant document before the Tribunal for review of the Decision and the Commissioner, and the Tribunal standing in his shoes, consider the 'specified scheme'. This is because the private rulings system merely provides for the Commissioner (and the Tribunal) to express an opinion about the application of the law to a question and to a 'specified scheme'. As also noted above, the Tribunal's role is confined to reviewing the correctness of the ruling premised on the 'specified scheme' as described in the ruling, and the Tribunal has "no role whatsoever in fact finding".[19]
6. Section 359-65 in Sch 1 to the TAA deals with the situation where, for the purpose of an objection decision, the Commissioner may have regard to additional information not considered by the Commissioner when he made the private ruling. The Tribunal is similarly empowered to exercise the Commissioner's discretion under s 359-65(1) for the purpose of reviewing the Commissioner's objection decision: s 54 of the Administrative Review Tribunal Act 2024 (Cth).
7. Further, the Tribunal may consider additional information otherwise within the terms of

s 359-65(1) irrespective of whether the Commissioner has in fact considered that material in making his objection decision.14 However, the Tribunal observes that s 359-65(1) only permits consideration of material that is informative about the 'facts' comprising the 'specified scheme'. That is, the Tribunal may only consider additional information pursuant to s 359-65(1) to the extent that it bears upon the correctness of the ruling.[20] Significantly, the Tribunal cannot make its own findings of fact, make assumptions, re-define the scheme or create its own description of the scheme.[21] 8. In the present case, it is acknowledged that Mr Wannberg did provide further information to the AAT and, later to the Tribunal, including two updated breakdowns of costings regarding Medical Expenses totalling $104,352 and $105,525, on 22 April 2024 and 3 May 2024 respectively, and a psychiatrist's letter dated 17 April 2024, all of which were additionally considered by the Tribunal.[22] 9. I turn now to consider the Commissioner's opinion in the Private Ruling, noting, as set out above, that. the 'facts' in the Private Ruling were limited, based on the information provided by Mr Wannberg. It will be recalled that those 'facts' were that Mr Wannberg was unemployed, not in business and the recipient of a TPD pension (see [12] above). The 'facts' also included a table describing certain medical expenses and estimated costs and as noted above, there were two updated tables of medical costs provided in the course of the proceedings (Medical Expenses).

1. Section 8-1 of the ITAA 1997 relevantly states:

(1) 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;

(2) However, you cannot deduct a loss or outgoing under this section to the extent that:

(b) it is a loss or outgoing of a private or domestic nature; or

1. Based on the 'specified scheme' in the Private Ruling, it is necessary to determine under

s 8-1(1)(a) of the ITAA 1997 whether the Medical Expenses will be incurred in gaining or producing Mr Wannberg's assessable income being his TPD pension and whether the Medical Expenses are private or domestic in nature under s 8-1(2)(b) of the ITAA 1997. 2. In Commissioner of Taxation v Payne [2001] HCA 3; (2001) 202 CLR 93 (Payne), the High Court noted that the language 'incurred in gaining or producing' did not create a test of whether outgoings were incurred 'in connection with' the derivation of assessable income or 'for the purpose of deriving such income. Rather, the statutory phrase required analysis of whether the outgoing was incurred 'in' gaining assessable income.[23] The High Court stated that 'incurred in gaining or producing' is to be understood as meaning incurred 'in the course of gaining or producing.'[24] The High Court approved what was stated in Ronpibon Tin NL v Federal Commissioner of Taxation [1949] HCA 15; (1949) 78 CLR 47 at 57 where it was held in relation to the similar predecessor provision to s 8-1 of the ITAA 1997 that "to come within the initial part of [s 51(1)] it is both sufficient and necessary that the occasion of the loss or outgoing should be found in what is productive of the assessable income..."[25] 3. In Federal Commissioner of Taxation v Anstis [2010] HCA 40; (2010) 241 CLR 443 (Anstis), the High Court noted that the test to be applied to deductions under s 8-1(1)(a) is not materially different from its predecessors.[26] The High Court held that a full-time student in receipt of the youth allowance was allowed a deduction for various self-education expenses (including textbooks and a student administration fee) as they were considered to be incurred in gaining or producing the youth allowance which was assessable income. The expenses were also held not to be of a private nature. The relevant extracts from the High Court's judgment are set out below in relation to those issues.

30. Essential to the inquiry of deductibility is the identification of that which is productive of the assessable income. To put it another way, one must ask how the assessable income was (or was expected to be) gained or produced. Contrary to what the Full Court said, the respondent was not "paid to undertake [study]" and that was not required to be so for the deductions to be allowable. Rather, as Ryan J said, the assessable youth allowance income received by the respondent was gained or produced by her entitlement to that payment consequent on the determination by the Secretary that she qualified for the payment. That statutory right to payment would be retained by her, without reduction, non-payment, suspension or cancellation, so long as she maintained her qualification for the payment by satisfying the activity test by undertaking full-time study so defined. > > 31. The reason or motive of the respondent for incurring those education expenses, which could be characterised, for example, as obtaining a qualification to undertake future employment as a teacher, is not determinative of the question whether they were incurred in gaining or producing income. The occasion of the outgoings was to be found in what the respondent did to gain or produce, by establishing and retaining her entitlement to, the receipts provided by the terms of the social security legislation.

34. The question presented for resolution on this appeal is unusual because the outgoings incurred in study undertaken by the respondent were not deductible by reason of that study bearing some relation to an existing business or existing employment on her part. Those outgoings were deductible by reason of their being incurred in the course of her retention of a statutory right to payment. ...

...

38. The Commissioner contended that the respondent's expenditure was private in nature as it was an attempt by her to better herself as an individual; it was an investment in "human capital". However, in Finn, Windeyer J observed:

"Outgoings incurred for the genuine purpose of acquiring or maintaining knowledge and skill in a vocation do not become an outgoing 'of a private nature' simply because the taxpayer got pleasure and satisfaction in increasing his knowledge and attainments."

It follows that the respondent's desire to obtain a degree, whether to enable her to become a teacher or for some other reason, cannot deny the circumstance that expenses occasioned by her enrolment, full-time study and satisfactory progress in that degree were incurred by her as a recipient of youth allowance. The outgoings did not lose their connection with the "position" she held as a recipient of youth allowance simply because she might have been studying for reasons other than enjoying an entitlement to youth allowance. As Hill J recognised in Cooper, in relation to the consumption of food or drink, the concept of a particular type of expenditure being absolutely or always "private" cannot be sustained. There is no sufficient foundation for a conclusion that the expenditures by the respondent were essentially private in nature within the sense of s 8-1(2)(b) of the 1997 Act.

(bolding is emphasis added, footnotes omitted)

IS THE PRIVATE RULING CORRECT THAT THE MEDICAL EXPENSES ARE NOT DEDUCTIBLE?

1. In his written submissions dated 31 October 2024 and 17 March 2025, Mr Wannberg submitted that the Medical Expenses are required to sustain his financial lifeline. He relied on Anstis and argued that the medical expenses are deductible as his assessable income - the TPD pension - is directly and uniquely tied to his disability. He argued that the Medical Expenses are intrinsically connected to the source of his income and that he needed to incur them for medical care necessary to manage the conditions that led to his disablement and subsequent receipt of the TPD pension. He argued that the Medical Expenses are "not merely incurred to 'better live with' [his] condition but to ensure the continued viability of the pension itself, which is tied directly to the management of [his] disability". He claimed that his Medical Expenses "are incurred as part of maintaining [his] eligibility for the TPD pension and thus they fall squarely within the meaning of outgoings incurred or gained in producing assessable income."
2. Mr Wannberg further argued that the Medical Expenses cannot be viewed as private or domestic in nature having regard to the context of his TPD pension and the fact his income is solely derived from his medical condition. Mr Wannberg submitted that "[t]his unique situation falls outside the scope of conventional interpretations of "private" or "domestic" expenses, as it is the treatment of the medical condition that maintains the flow of income".
3. I disagree and have decided that the Private Ruling is correct and should not have been made differently. The 'specified scheme' in the Private Ruling does not demonstrate the requisite 'productive' nexus between the Medical Expenses and Mr Wannberg's assessable income in the form of the TPD pension. It was common ground that the purpose of the TPD pension is to allow Mr Wannberg to continue his lifestyle while being unable to work because of his medical condition. The TPD pension is for his medical condition. The Medical Expenses are incurred by Mr Wannberg to better live with his medical condition, not incurred 'in' gaining or producing the TPD pension. The incurring of the Medical Expenses do not 'produce' his medical condition nor, more significantly, do they 'produce' the TPD pension. Therefore, the Medical Expenses are not incurred 'in' gaining or producing assessable income under s 8-1(1)(a) of the ITAA 1997.
4. In Anstis, the self-education expenses were deductible because the assessable youth allowance received by the taxpayer was gained or produced by her entitlement to that payment consequent on the determination that she qualified for the payment. The High Court held that "[t]he occasion of the outgoings was to be found in what [the taxpayer] did to gain or produce, by establishing and retaining her entitlement to, the receipts provided by the terms of the social security legislation".[27] Mr Wannberg's position is not analogous to Anstis because the occasion of the Medical Expenses is to assist Mr Wannberg with his medical condition, not to gain or maintain his eligibility to the TPD pension.
5. Separately, the Medical Expenses are also of a private or domestic nature and, therefore, in any event, not allowable deductions under s 8-1(2)(b) of the ITAA 1997. An outgoing is of a "private" nature where it is essentially personal in character. For example, the proposed psychotherapy sessions and dental repairs estimated to cost $11,000 and $5,000 respectively are intrinsically personal in nature as they relate to Mr Wannberg taking care of his mental and dental health. While it is accepted that a particular type of expenditure cannot be said to be always private in nature, I was not persuaded in the present case that the Medical Expenses were not private or domestic in nature having regard to the 'specified scheme'.
6. For completeness, it is noted that in Anstis, the Commissioner unsuccessfully argued the outgoings were private in nature because it was attempt by the taxpayer to better herself as an individual and, therefore, an investment in 'human capital'.[28] The High Court held that the self-education expenses were not private expenses because they did not lose their connection with the taxpayer's position as a recipient of the youth allowance simply because the taxpayer may have been studying for reasons other than enjoying an entitlement to the youth allowance. That reasoning does not assist Mr Wannberg because the Medical Expenses are incurred by him only to allow him to live with his medical condition.

1. The Decision, being the Commissioner's objection decision to disallow Mr Wannberg's objection to the Private Ruling, is affirmed.

I certify that the preceding 38 (thirty-eight) paragraphs are a true copy of the reasons for the decision herein of Deputy President G Lazanas

......................[SGD].................................................

[1] Since the filing at the AAT of the application for review, the Administrative Review Tribunal (Tribunal) has been established by the Administrative Review Tribunal Act 2024 (Cth). Broadly, transitional provisions under the Administrative Review Tribunal (Consequential and Transitional Provisions No. 1) Act 2024 (Cth) provide that unfinalised proceedings in the AAT must be continued and finalised by the Tribunal in a manner that is efficient and fair. No practical issue arises from the AAT being replaced by the Tribunal.

[19] The Public Servant and Commissioner of Taxation (2014) AATA 247 at [53].

[21] Commissioner of Taxation v Eichmann [2019] FCA 2155 at [22] (Derrington J) (approved on appeal in [2020] FCAFC 155 at [16]), citing Rosgoe Pty Ltd v Commissioner of Taxation (2015) FCA 1231 at [12]- [15] (Logan J).

[25] Payne at [9]. See also Federal Commissioner of Taxation v Anstis [2010] HCA 40; (2010) 241 CLR 443 at [27].