Private ruling: work related expenses - conventional clothing
Published: November 2011
Ruling period: Year ended 30 June 2011 | Year ending 30 June 2012 | Year ending 30 June 2013 | Year ending 30 June 2014 | Year ending 30 June 2015
Date scheme commenced: 1 July 2010

Ruling: Q1: Are you entitled to a deduction for a portion of the expenses incurred in purchasing conventional clothing worn at work? | A1: 

Relevant facts and circumstances: Your role requires you to be sent out on assignment for shoots. Some shoots can run into days and are sometimes located in remote locations both in Australia and overseas. You submit that you are often required to change clothes multiple times on any particular day due to changing weather conditions or consecutive day and evening appointments. Whilst on assignment you are expected to dress in a manner compatible with your standing. You submit that the type of work functions you are required to attend call for a higher standard of dress than you would usually buy for personal use. You spend a significant amount of money on clothing and accessories worn at work. You do not receive a clothing allowance.

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

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 to which 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. Expenditure on clothing and its maintenance is generally treated as private expenditure and therefore, not deductible under section 8-1 of the ITAA 1997. Taxation Ruling TR 97/12 considers the deductibility of work related clothing, uniform and footwear. According to TR 97/12, expenditure on conventional clothing is not often an allowable deduction as there is not a sufficient connection between expenditure on the clothing and the income earning activities of the taxpayer. Whether a sufficient connection exists is a question of fact, to be determined by the particular circumstances of the case. The fact that a taxpayer's employer requires or expects the taxpayer to wear a particular type or style of conventional clothing does not make the cost of that clothing deductible ( Mansfield v. FC of T (1996) 31 ATR 367; 96 ATC 4001). The fact that the taxpayer perceives that it is important to their success in their occupation, to wear a particular type or style of conventional clothing, does not make the cost of that clothing deductible. Clothing expenses are only deductible in certain circumstances under section 8-1 of the ITAA 1997. A deduction may be allowed, where the clothing can be easily distinguished from normal day-to-day wear and the necessity to wear such clothing can be specifically related to the taxpayer's income producing activity. | Detailed Reasoning - Edward's case: Taxation Ruling TR 94/22 discusses the implication of the decision in the Federal Commissioner of Taxation v. Edwards (1994) 49 FCR 318; 94 ATC 4255; (1994) 28 ATR 87 ( Edward's case ) regarding the deductibility of expenditure on conventional clothing by employees. The facts in Edward's c ase were special and it is unlikely that many situations are analogous to the circumstances involved. In Edward's case the taxpayer was employed as the personal secretary to the wife of the Governor of the State of Queensland. As part of this employment, she had need of an extensive wardrobe of high quality clothing, including hats, gloves and formal full length evening dresses. She claimed a portion of the expenditure incurred on her wardrobe, based on the cost of additional expenditure she incurred as a result of her employment. In allowing the claim for clothing, the following factual finding was referred to by Gummow J of the Federal Court, and Foster, Drummond and Cooper JJ of the Full Federal Court: There is nothing about the additional changes of clothes in a work day for this taxpayer which serve a private purpose. Her personal requirements of modesty, decency and warmth are met by her first set of clothes for the day. Her additional changes of clothing throughout the day solely serve work-related purposes which enable the taxpayer in the performance of her duties at many different types of functions as personal secretary. The expenditure on the additional clothing is incurred in the course of gaining the income. Factors taken into account in arriving at this conclusion for this taxpayer include that: § an extensive wardrobe of high quality clothes was necessary to perform her activities properly, § the quantity and quality of the clothing was in excess of her normal every day requirements, § the taxpayer's duties regularly required changes of clothing, sometimes two and three times a day, in the course of performing her income-producing activities, and § the taxpayer only infrequently used the wardrobe for private purposes, and it was impractical to use the clothing for private purposes. In Case 48/94 94 ATC 422; AAT Case 9679 (1994) 29 ATR 1077 ( Case 48/94) , the taxpayer, a self-employed professional presenter and speaker, submitted that their circumstances were comparable to the Edward's case . The taxpayer maintained a separate wardrobe to meet their work requirements and used this wardrobe exclusively in relation to work. Sometimes, a client would request they dress in a specific manner when performing a presentation. Image was of vital importance in both securing and performing their duties and clothes were an aspect of their image. Senior member Barbour disallowed the deduction for the clothing and said that: While the A list clothes [those used exclusively for work] assisted in creating an image compatible with the applicant's perceptions of her clients' and audiences' expectations, her activities productive of income did not turn upon her wearing A list clothes, however important the applicant may have perceived these clothes to be in her presentation activities. There is not the requisite nexus between her income earning activities and the A list clothing. That the expense is not a business expense is also indicated by the conventionality of the clothing. The applicant did not buy specific clothes for specific presentations (as an entertainer might) or have clothes that were specific and suited only for her employment or business (as a nurse might). The applicant chose to wear her A list clothes for business only, but this does not then enable the expense in purchasing those clothes to be treated as a business expense. Nor did she wear several changes of clothes while performing her duties, such that this expense for additional clothing was purely for the purpose of gaining or producing income, and hence properly regarded as a business expense, despite its conventionality (as in Edwards case ). In Case 72/96 96 ATC 640; AAT Case 11,455 (1996) 34 ATR 1098 ( Case 72/96) a television newsreader was denied a deduction for the cost of clothing purchased for use on camera. The items of clothing included suits, shirts, shoes, dresses, jackets and jewellery. They were selected by the newsreader because they came up well on television, looked appropriate and created the desired image. The AAT found that the items of clothing were 'ordinary articles of apparel' that any professional or business woman might purchase to wear to work. The fact that the clothing would look good on television was not sufficient to make the cost deductible. The clothing was not worn as part of a uniform and was not of a special nature and to be worn in unusual circumstances. The clothing expenses were of a private nature. Your circumstances are similar to those in Cases 48/94 and 72/96 noted above. The clothing items purchased were conventional clothing items. The clothing is not distinctive or unique to the nature of your employment as high quality clothing by their own nature are available to and intended to be worn by members of the public. We acknowledge that you may be required to travel to remote locations and attend events in relation to your employment. However your circumstances can be distinguished from Edward's case as although on some days you may be required to change clothes it is not a consistent requirement that you change high standard clothes repeatedly during the day as was the situation in Edward's case. The fact that you may need to carry more clothing due to the length of time away from home and the possible lack of laundry facilities does not create deductibility for clothing expenses. The quantity of clothing required is not considered to be in excess of your normal everyday requirements. The fact there is an expectation as part of your role in the media industry to wear a particular type or style of clothing does not make the cost of that clothing deductible. In addition, incurring expenditure for promotional purposes as part of your employment is not a sufficient reason for the expense to be an allowable deduction. There is not a sufficient connection between the clothing expenditure and your income producing activity to allow a deduction. Accordingly a deduction for the purchase of the clothing and footwear is not allowable under section 8-1 of the ITAA 1997.

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