Transgender people and military service
Debate about inclusion of transgender people in the military: 

Arguments against inclusion: There are arguments against the inclusion of transgender people in military service. One argument is based on the view that being transgender is a mental illness, and as such transgender individuals are unfit for service. This argument follows a high incidence of depression and suicide manifest in transgender individuals. This is especially pertinent in individuals who have had sex-reassignment surgery and are unsatisfied with the results; in such cases severe depression is prevalent. Hormone therapy can affect mood and a sense of well-being, a factor that counts against inclusion of transgender people and its effect on service capability. Besides the well-being argument of hormone treatment, complications may arise due to hormone treatments. Possible complications arising from estrogen and testosterone therapies include an increased risk of thromboembolic disease, myocardial infarction, breast cancer, fertility problems, stroke, abnormal liver function, renal disease, endometrial cancer, and osteoporosis. Any of these could cause significant issues to effective military service, especially when deployed in remote areas or in field training settings. Another concern is the cost to treat transgender members in the military. A small portion of transgender soldiers seek medical intervention, yearly 30 to 140 pursue hormone treatment and 25 to 100 have surgical reassignment surgery. It is estimated that a male-to-female transition can cost between US$7,000 and $24,000; female-to-male transition can exceed US$50,000. The Defense Department's yearly budget for healthcare is $6 billion, the numbers found in the study show the cost to treat service members with GD would fall between $2.4 million and $8.4 million, that is .04 to .14 percent of the military's annual healthcare budget.
A further argument is that in order to have an effective, smooth-running military, there must be cohesion within the unit. It is argued that transgender individuals would have a negative impact on unit cohesion. "The bonds of trust among individual service members" are vital. There is a fear that if transgender personnel be allowed to serve openly, morale will be detrimentally affected. But this argument neglects to deal with the question of what kinds of structural accommodations might be needed to maintain morale and unit cohesion in such situations. Military service forces members into very intimate living quarters. Requiring members to live in situations that make them feel disconcerted and uncomfortable may result in their performance being undermined.

Arguments for inclusion: By excluding a demographic from equal service, militaries are overtly intensifying the stigma of that group's civic inferiority. This is supported by the notion that all citizens are obligated to serve their nations if the need arises. Allowing transgender military personnel to serve openly without fear of exclusion would be a huge step toward equality. It has been recognized by some academics that the inclusion of all LGBT personnel in the military is more than a mere human rights issue, it is argued that for militaries to survive in the twenty-first century diversity is critical.
With advancements in the current understanding of human experience, sexual identity is now better understood. Where being transgender was once considered a paraphilic disorder, the current Diagnostic and Statistical Manual of Mental Disorders places being transgender in a separate chapter, terming the condition gender dysphoria. It is argued that militaries that exclude transgender people on grounds of mental illness, whose policies pathologize gender dysphoria, are at odds with the current medical understanding. This argument requires that transgender personnel be treated by the same level of medical care as all other personnel, in accordance with established medical practice.
Experts argue that there is no empirical evidence that supports the argument that transgender people are unfit for service. Often cited are factors such as a supposed predisposition of transgender individuals to problems such as depression, anxiety, and suicidal thoughts; this is countered by the prevalence of these same issues in the LGBT community, yet in many countries their service is not excluded. By creating a more accepting environment, distress that transgender personnel feel might be mitigated if they may serve openly with full support.
Whilst militaries often cite the high medical cost of transgender people, they fail to reconcile this argument with current standards with other service members. For example, militaries often allow hormone treatments for an array of reasons and conditions, besides gender dysphoria; a common hormone treatment being contraceptive. Furthermore, the often cited risks of cross hormone treatment are rare, and not likely to cause any significant issues to the military. Whilst the cost of gender reassignment surgery is high, it is suggested that fewer than 2% of transgender members per year will choose to undergo gender reassignment surgery.
Perhaps one of the most supporting arguments is based on the experiences of the 18 countries that currently allow transgender service. Research on the impacts of allowing LGBT to serve openly in the Israeli Defense Forces, British Armed Forces, and Canadian Armed Forces found no necessary negative impacts on performance, unit cohesion or morality. The idea of unit cohesion can also be demonstrated by a social study conducted less than one year prior to the repeal of the ban preventing transgender personnel from serving openly in the United States military. Morten G. Ender, David E. Rohall, and Michael D. Matthews presented the American military academy, Reserve Officers Training Corps, and civilian undergraduates with a survey to assess the general attitude on the prospect of the transgender community serving in the U.S. Armed Forces. After statistical analysis, 50.8% of individuals disagreed with the ban. In regards to productivity, 72.6% of subjects say that transgender inclusion would have no impact on their ability to do their job. Finally, on the subject of visibility, 21.8% of those interviewed said they would want transgender individuals to tell them their gender preferences, 56.1% said no preference. Overall, based on this study one year prior to the ban, the majority of the people that participated in the survey showed overwhelming support towards the inclusion of the transgender community in the United States military.
In October 2017, ruling that a renewed ban within the US military should not go into force, US District Judge Colleen Kollar-Kotelly stated that the evidence presented up to that time showed that "all of the reasons proffered ... for excluding transgender individuals from the military in this case were not merely unsupported, but were actually contradicted by the studies, conclusions and judgment of the military itself".

Status of transgender people in the military by country: 

Australia: Eighteen years after the Australian Defence Force lifted their ban on gay and lesbian service, the ADF reversed policy that excluded transgender people from military service. The policy of inclusion was reportedly still in effect in 2017.
It is believed that the Australian Defence Force was the last agency whose policy specifically allowed for firing employees for transitioning gender. The ADF policy supports diversity in the military identifying LGBTI as a main priority, whose key objective is to position the ADF as an employer of choice, who as an organisation respects and supports the inclusion of gender diverse persons.
In 2013 Australian law formally codified protections against discrimination based on gender identity by including federal protections for LGBTI in the Sex Discrimination Act 1984. There are approximately 15 transgender service member who are openly living as their identified gender, with the support of ADF ranking officials who have been vocally committed to creating an inclusive and diverse military environment.
In a One Plus One interview with ABC News ADF's highest ranking transgender service member Lieutenant Colonel Cate McGregor speechwriter to the Chief of Army, Lieutenant General David Morrison AO, stated that the Chief of Army took the view that the "army could not survive if it became a demographic ghetto" and described an underbelly within the military whose culture was to exclude those who are different. In the wake of the Jedi Council sex scandal Chief of Army released a strongly worded statement urging all service members to show moral courage, to stand against any person degrading another individual. He further stated that he will "be ruthless in ridding the army of people who cannot live up to its values".
Whilst there might still be a long road to full acceptance of the transgender community in Australia, transgender service members and their families are supported by DEFGLIS whose aim is to support LGBTI personnel and families, strengthen defence capability through inclusion, and educate the workforce about diversity.

Austria: As of 2014, Austria allowed transgender people to serve openly in its military forces. The policy of inclusion was reportedly still in effect in 2017.

Belgium: As of 2014, Belgium allowed transgender people to serve openly in its military forces. The policy of inclusion was reportedly still in effect in 2017.

Bolivia: The Armed Forces of Bolivia announced in 2013 that LGBT citizens would be allowed to serve beginning in 2015. As of 2014, Bolivia allowed transgender people to serve openly in the military. The policy of inclusion was reportedly still in effect in 2017.

Brazil: There is no law forbidding transgender people from serving in the Brazilian Armed Forces. Sexual orientation and gender identity cannot be an obstacle for entry into the police force or the military in Brazil, and some trans women and travestis can be conscripted, like some Brazilian male citizens. According to a survey conducted by the Institute of Applied Economic Research (IPEA) in 2012, 63.7% of Brazilians support the entry of LGBT individuals into the Brazilian Armed Forces, and do not see it as a problem.

Canada: In 1997, Seargent Sylvia Durand became the first serving member of the Canadian Forces to transition from male to female, and became the first member of any military worldwide to transition openly while serving under the Flag.