It is a common misconception that, if you are a sole trader and you injure yourself at work, you can claim any physiotherapy or medical expenses as a tax deduction for that year. Unfortunately, this is not the case as the ATO deems that these are of a private/personal nature and as such are not considered claimable expenses, even if the injury occurred at work.
Additionally, if you receive Worker’s Compensation or Income Protection as a replacement for wages when recuperating, these are assessable income. Lump-sum payments for permanent injury or compensation, however, are not taxable.
If you are unsure about what you can and cannot claim, you should always speak with your tax agent.