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Edited version of your written advice
Authorisation Number: 1012999988104
Date of advice: 20 April 2016
Ruling
Subject: Work-related expenses for conventional clothing
Question
Are you entitled to a deduction for the expenses incurred to purchase conventional clothing?
Answer
No.
This ruling applies for the following periods
Year ended 30 June 2014.
Year ended 30 June 2015.
The scheme commences on
1 July 2013
Relevant facts and circumstances
You are the store manager of a clothing company.
Your employer's company policy states that employees must wear the brand name items of clothing and purchase specific type of clothing with changes of season's or trends.
You must wear the clothing to advertise the brands whilst serving customers to advertise the company you work for.
You would not normally wear these items of clothing outside of work nor privately.
You state:
While the product can be worn outside of work, I choose not to. If I do manage to have free time, I will purchase a different brand purely because it's the only time I'm able to do so. Majority of retail workers also do the same thing. It is a requirement of my employment for me to wear and represent the product - so definitely excessive clothing expenditure compared to what an average person would spend. Due to the extremely high turnover of product/styles within stores (an average of 60+ each week), it is unacceptable for a SM (store manager, myself) to represent product that is no longer available or stock that has gone on sale. This is a major contributor to the large scale of clothing purchased.
You state the amount you spend was $1,200 per year.
You state your expenditure on these brands of clothing to be excessive.
You would wear this item of clothing maybe once or twice or only at work.
Relevant legislative provisions
Income tax Assessment Act 1997 section 8-1
Reasons for decision
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.
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.
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