Private ruling: Work related expenses
Published: July 2013
Ruling period: Year ended 30 June 2012 | Year ended 30 June 2013
Date scheme commenced: 1 July 2011

Ruling: Q1: Are you entitled to a deduction for the expenses incurred to purchase conventional clothing? | A1: No.

Relevant facts and circumstances: You work for a company. You must wear your company's clothes as a condition of your employment. The clothes you wear must be available for purchase by customers. The clothes can only be purchased from your company's stores.

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

Reasons for decision: Summary: Section 8-1 of the Income Tax Assessment Act 1 997 (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. Taxation Ruling TR 97/12 explains that the cost of conventional clothing is usually not considered to be an allowable deduction as there is insufficient connection between the expenditure and the income earning activities of the taxpayer. The expense is normally characterised as private. However, expenditure may be deductible where the clothing is part of a compulsory and distinctive uniform/wardrobe or is worn to protect you from injury or protect your everyday clothing from damage (like a laboratory coat). The Commissioner has issued a number of occupation-based rulings on work related expenses claims. Taxation Ruling TR 95/10 contains the Commissioner's view of the application of those principles to deductions claimed by shop assistants. Paragraph 70 of TR 95/10 states: In certain men's and women's clothing stores the employer requires that staff wear clothing from their range. The fact that the shop assistant is required or encouraged to buy this clothing does not convert the expense into an allowable deduction. It is our view that expenditure in these circumstances is not incurred in gaining and producing assessable income and is of a private nature. In your case, you purchase clothing from the store where you work as it is a requirement of your employer that you do so. The clothing is considered to be conventional in nature, and is available to the general public and is not distinctive or unique to the nature of your work. While we accept that you are required to wear your employer's clothes as a condition of your employment, it is not considered that the essential character of the expenditure is work related. Therefore, the expenditure you have incurred on the purchase of clothing is of a private nature and is not deductible under section 8-1 of the ITAA 1997.