Private ruling: Rehearsal clothing
Date of advice: 10 February 2017
Published: July 2017
Ruling period: Year ended 30 June 2016 | Year ended 30 June 2017 | Year ended 30 June 2018
Date scheme commenced: 1 July 2015

Ruling: Q1: Are you, as a professional entertainer and dancer, entitled to a deduction for 'active wear' which you purchase for training and rehearsal purposes? | 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 (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. Taxation Ruling TR 97/12 Income tax and fringe benefits tax: work related expenses: deductibility of expenses on clothing, uniform and footwear, discusses the Commissioners view on the deductibility of work related clothing, uniform and footwear expenses. Taxation Ruling TR 97/12 provides that the cost of buying clothing will in most circumstances, be regarded as an expense of a private nature. Clothing is necessary for protection of the body from the elements and to meet societal norms of modesty, fashion or similar conditions. 'Active wear' refers to clothing worn for sport or physical activity. The term refers to garments on clothes which provide style along with comfort and with function and are made up of sustainable materials. The clothing is used not only for exercising but also for casual wear http://www.differencebetween.net/miscellaneous/fashion-beauty/difference-between-activewear-and-sportswear. In recent times, the use of active wear by many people has been extended to casual wear. 'Active wear' clothing is readily available at departmental stores and many other places including specialty stores. In your case, you purchase your 'active wear' clothing for rehearsal purposes a department store which is a store where exercise and sporting clothing is available for the public to buy in person or on-line. For expenditure to be deductible, the expenditure must have the essential character of an outgoing incurred in gaining assessable income. It is not sufficient that the expenditure is a prerequisite to the derivation of assessable income; it must contribute to the derivation of that income. TR 97/12 provides that expenditure on the following types of clothing is considered to be deductible: ● occupation specific clothing ● compulsory uniform/wardrobe ● non-compulsory uniform/wardrobe ● protective clothing and footwear | Detailed Reasoning - Deductibility of conventional clothing: Taxation Ruling 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. While there is no universal rule that conventional clothing can never be deductible, in most cases expenditure on conventional clothing will not be deductible. TR 97/12 provides 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. With regards to 'active ware', paragraph 64 of TR 97/12 provides the following example, Warren is a sports teacher. He claims deductions for the cost of purchasing track suits, T-shirts, shorts and socks. These are conventional clothes which do not form part of a uniform, do not protect Warren and are not distinctive of Warren's particular occupation or employer. Expenditure on clothing of this type is generally private in nature and is not deductible. | Detailed Reasoning - Active wear worn for rehearsals: You purchase 'active wear' for training and rehearsals. Typically this 'active wear' would include items that a dancer would ordinarily train in. The clothing described may be distinctive being 'active wear' from a store. However this clothing is not consistent with being considered part of a compulsory or non-compulsory uniform, or to be protective in nature. In addition, the 'active wear' only identifies you as a person who participates in the dance and performing industry, it does not identify you as a professional dancer or professional entertainer. Therefore the 'active wear' clothing cannot be considered to be occupational specific clothing. It is acknowledged that your 'active wear' clothing is not worn ordinarily for any purpose other than your rehearsals, however this on its own is not sufficient to allow a deduction as the clothing is still conventional and therefore is fundamentally private in nature. As already stated, 'active wear' is available to the general public and does not distinctively identify you as a professional dancer and entertainer. Therefore consistent with the principals established in TR 97/12, the expenses incurred in purchasing 'active wear' does not have the essential character of a work related expense. Accordingly, you are not entitled to a deduction for the cost of purchasing 'active ware' clothing under section 8-1 of the ITAA 1997.

Relevant facts: You are a sole trader professional artist. | You work mainly on cruise ships as a professional entertainer and dancer. | You are not required to purchase your own costumes for performances. | You buy your own 'active wear' for training and rehearsals. | You do not use this wear other than for rehearsals. | You usually buy the 'active wear' from a department store where you also have a part-time job.