Private ruling: Jewellery
Published: July 2014
Ruling period: Year ended 30 June 2014
Date scheme commenced: 1 July 2013

Ruling: Q1: Are you entitled to a deduction for the cost of jewellery? | A1: No.


Relevant legislative provisions: Income Tax Assessment Act 1997 Section 8-1

Reasons for decision: Summary: Section 8-1 of the Income Tax Assessment Act 1997 allows a deduction for all losses and outgoings to the extent to which they are incurred in gaining or producing assessable income except where the outgoings are of a capital, private or domestic nature. Taxation Ruling TR 97/12 Income tax and fringe benefits tax: work related expenses: deductibility of expenses on clothing, uniform and footwear, considers the deductibility of work related clothing, uniform and footwear expenses. The ruling states that generally the cost of buying clothing will be regarded as an expense of a private nature. Clothing is necessary for protection of the body from the elements and to meet social norms of modesty, fashion or similar conditions. The circumstances where expenditure for clothing is considered to be deductible are where the clothing is: • occupation specific clothing • a compulsory uniform/wardrobe • a non-compulsory uniform/wardrobe • protective clothing and footwear Occupation specific clothing Occupation specific clothing distinctively identifies the wearer as a person associated with a particular profession, trade, vocation, occupation or calling. Examples are cleric's ceremonial robes, a barristers robes, a chefs chequered trousers and a nurses traditional uniform. Compulsory uniform/wardrobe A compulsory uniform/wardrobe must be prescribed by the employer in an express policy which makes it a requirement for the employees to wear that uniform while at work. The uniform/wardrobe needs to be sufficiently distinctive so that the casual observer can clearly identify the employee as working for the particular employer. An example of this is a bank's corporate wardrobe with the corporate logo or emblem clearly visible. Non-compulsory uniform/wardrobe A non-compulsory uniform/wardrobe is a set of one or more items of clothing that distinctively identify the wearer as a person associated, directly or indirectly, with an employer. A deduction is only allowable for a non-compulsory uniform/wardrobe where the design of the uniform/wardrobe has been entered on the Register of Approved Occupational Clothing that is maintained by the Department of Industry, Tourism and Resources. An example of this may be a polo shirt with the business registered logo embroidered on it. Protective clothing and footwear Jewellery does not have protective qualities. Conventional clothing TR 97/12 also considers the deductibility of conventional clothing. Conventional clothing is everyday clothing that would ordinarily be worn, or which could reasonably be worn, by a person irrespective of whether that person is working or not, for example, a pair of jeans or a shirt. TR 97/12 states that expenditure on conventional clothing is often not an allowable deduction as there is not usually a sufficient connection between the expenditure and the income earning activities of a taxpayer. Factors that are relevant to the question of whether a sufficient connection exists so that the essential character of the expense is work related rather than private in nature include: • express or implied requirements of the employer or business concerning clothing; • the extent to which the clothing is distinctive or unique to the nature of the employment or business having regard to particular, special or accepted work clothing requirements, including its availability to be worn by members of the general public; • the extent to which the clothing is worn solely for work; • the extent to which the clothing is unsuitable for any activity other than work. A deduction for conventional clothing was allowed in Federal Commissioner of Taxation v. Edwards 94 ATC 4255; 28 ATR 87. In Edward's case, the taxpayer worked as the personal secretary to the wife of the Governor of Queensland. She sought a deduction for expenses incurred in purchasing hats, gloves and formal gowns which she was required to purchase to fulfil the duties of her position. The taxpayer was expected to dress in a manner compatible with the Governor's wife. She was also required to wear several different outfits each day to attend various functions. It was determined that the additional clothing purchased was over and above the personal requirements of her normal attire for private use. Whilst the additional nature of the clothing is a relevant factor to be taken into account, it will not be sufficient where the income earning activities do not turn upon the wearing of the additional clothes and where they are not specific and suited only for the income earning activity. In your case, jewellery is not considered to be: • Occupation specific • Compulsory uniform/wardrobe • Non-compulsory uniform/wardrobe or • Protective clothing and footwear The jewellery is best considered to be conventional clothing and it is accepted that it is a requirement of your employer that you wear jewellery purchased from the store. However, it is not distinctive or unique and is available to be worn by members of the general public. The jewellery is such that it can and is worn by the general public and is suitable for you to use in a private environment. Therefore, you are not entitled to a deduction for jewellery purchased and worn at work.

Relevant facts: You worked in a costume jewellery shop. | Your employer required you to purchase jewellery from the store and wear a number of pieces per day.