ATO Interpretative Decision

ATO ID 2001/670 (Withdrawn)

Income Tax

• This ATO ID is withdrawn as the interpretative issue is covered in TR 95/10
  This document incorporates revisions made since original publication. View its history and amending notices, if applicable.

Issue

Is a deduction allowable under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) for expenses incurred by the taxpayer in purchasing fashion clothing as required by their employer?

Decision

No, a deduction is not allowable under section 8-1 of the ITAA 1997 for expenses incurred by the taxpayer in purchasing fashion clothing as required by their employer.

Facts

The taxpayer is a retail shop assistant at a clothing store specialising in brand name goods.

The employer insists that all employees wear the store's brand name clothing, although they do not prescribe the wearing of the clothes in an express policy.

The taxpayer purchased the items of clothing and wears them at work but does not wear them outside of work.

Reasons for Decision:

Section 8-1 of the 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 considers the deductibility of work related clothing, uniform and footwear. The ruling states that expenditure on a compulsory and distinctive uniform/wardrobe is allowable as the compulsory and distinctive characteristics provide the connection between the expenditure and the work activity.

Taxation Determination TD 1999/62 provides details of the requirements for clothing to be considered 'compulsory uniform/wardrobe'. The wearing of a 'compulsory uniform/wardrobe' must be prescribed by the employer in an express policy which identifies the particular employee and stipulates colour, style and type of clothing. The policy must be strictly and consistently enforced.

The requirement for the taxpayer to wear the latest fashion clothes is not prescribed in an express policy, therefore the clothing does not constitute a 'compulsory uniform' as described in TD 1999/62.

Taxation Ruling TR 97/12 also states that 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.

The employer requirement that the taxpayer wear a particular type or style of conventional clothing is not sufficient by itself to make the expenditure deductible. Other factors that need to be considered are :

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the extent to which the clothing is distinctive or unique to the nature of the employment,

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the clothing's availability to be worn by members of the public,

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the extent to which the clothing is unsuitable for any activity other than work.

There is not a sufficient connection between the taxpayer's clothing expenditure and the income producing activity of selling clothes. The clothing is not distinctive or unique to the nature of the taxpayer's employment. By it's nature as fashion clothing, it is available to and intended to be worn by members of the public. Accordingly, the expenses are private in nature and therefore not deductible under section 8-1 of the ITAA 1997.

Legislative References:
Income Tax Assessment Act 1997
   section 8-1

Related Public Rulings (including Determinations)
TR 94/22
TR 97/12
TD 1999/62

Related ATO Interpretative Decisions
ATO ID 2001/7

Keywords
Clothing expenses
Corporate & compulsory clothing expenses
Work related expenses

Business Line:  Small Business/Individual Taxpayers

Date of publication:  30 November 2001

ISSN: 1445-2782