Private ruling: Work related expenses
Date of advice: 25 November 2021
Published: February 2022
Ruling period: 1 July 20XX to 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Are you entitled to a deduction for your makeup and tanning expenses? | A1: No. | Q2: Are you entitled to a deduction for your cosmetic surgery? | A2: No. | Q3: Are the expenses you incurred for your cosmetic surgery capital in nature, and is a deduction allowed for their depreciation? | A3: Some are capital in nature, but none are deductible.

Relevant facts and circumstances: You are a sole trader. You work as a model and have an online presence. You visit a cosmetic salon. Where specific makeup and tanning is contractually required, this is paid for or you are reimbursed. You have had cosmetic surgery.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 8-1 | Income Tax Assessment Act 1997 Section 40-25

Reasons for decision: Summary: Section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) allows a deduction for all losses and outgoings to the extent they are incurred in gaining or producing assessable income, except where the outgoings are of a capital, private or domestic nature, or relate to the earning of exempt income. Taxation Ruling TR 96/18 considers the deductibility of cosmetics and personal grooming related expenses. As a general rule, these expenses are private in nature and not deductible. TR 95/20 provides further guidance for employees that are 'performing artists'. Models are generally considered 'performing artists' but if you are an employee will depend on the terms of each hiring contract. TR 95/20 states that employees that are 'performing artists' are only entitled to deduct grooming expenses where the artist is "required" to use a particular grooming product for specific role. Generally, when a business client orders a photoshoot with cosmetic or tanning requirements your cosmetic expenses they are reimbursed. Any cosmetic expenses outside those reimbursed for particular photoshoots would therefore be considered personal in nature and not deductible. For your online presence, you were under no contractual requirement to use any specific cosmetic products or go to any particular cosmetic studio. Any cosmetic expenses for the purposes of your online presence are considered personal in nature and not deductible. You wish to claim deductions for your cosmetic surgery in the 2019-2020 and 2020-2021 Financial Years. Some cosmetic surgery, such as implants or teeth veneers, are considered surgical enhancements and are capital in nature. None of your surgery was undertaken in relation to any specific income earning activity you were undertaking. Consequently, even though modifying your physical appearance may have led to increase in your earnings, it was not wholly and exclusively connected to an income producing activity and is considered personal in nature (See IT 2217). Your other cosmetic surgery are not capital in nature but are considered private in nature (see TR 96/18). Outgoings that are of a capital, private or domestic nature, are not deductable under Section 8-1 of the ITAA 1997. As indicated above in Question 2, your surgical enhancements are capital in nature. However, you are not entitled to a depreciation deduction section 40-25 of the ITAA 1997 as they are private in nature. Applying FCT v Hatchett (1971) 125 CLR 494 supports that body enhancements in general would not be considered "assets" for which a decline in value might be allowed. Therefore, as your surgical enhancements are private in nature you are not entitled to claim a deduction under Division 40 of the ITAA 1997 for their depreciation.