Edited version of private advice

Authorisation Number: 1052180842995

Date of advice: 22 February 2024

Ruling

Subject: Deductions - personal appearance and grooming

Question

Can you claim grooming expenses as a deduction for branding purposes under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997)?

Answer

No

This private ruling applies for the following period:

1 July 202X to 30 June 202X

The scheme commenced on:

1 July 202X

Relevant facts and circumstances

You are a performing artist.

You have decided to invest time and effort on developing a grooming style that would make you instantly recognisable in a crowd. You have incurred expenses for products and for the grooming appointments which occur regularly with a trained stylist.

You have a manager.

Grooming requirements were not included in your original management contract. Your manager has asked you to keep certain grooming requirements for marketing purposes.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 8-1

Reasons for decision

Question

Can you claim grooming expenses as a deduction for branding purposes under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997)?

Summary

You are not entitled to a deduction for expenses relating to grooming expenses as they are private in nature.

Detailed reasoning

Section 8-1 of the ITAA 1997 allows a deduction from your assessable income for any loss or outgoing to the extent that:

•                     it is incurred in gaining or producing your assessable income

•                     it is necessarily incurred in carrying on a business for the purpose of gaining or producing your assessable income.

A deduction is not allowable for outgoings of a capital, private, or domestic nature or those related to exempt income.

Taxation Ruling TR 96/18 Income tax: cosmetics and other personal grooming expenses, provides the Commissioner's view on the deductibility of expenses incurred in respect of cosmetics and other personal grooming expenses.

At paragraph 8 of TR 96/18 it discusses a number of significant court decisions that have determined that, for an expense to satisfy section 8-1 of the ITAA 1997:

•                     it must have the essential character of an outgoing incurred in gaining assessable income or, in other words, of an income-producing expense (Lunney & Hayley v FC of T (1958) 100 CLR 478; (1958) 11 ATD 404)

•                     there must be a nexus between the outgoing and the assessable income so that the outgoing is incidental and relevant to the gaining of assessable income (Ronpibon Tin NL v FC of T (1949) 78 CLR 47; (1949) 8 ATD 431)

•                     it is necessary to determine the connection between the particular outgoing and the operations or activities by which the taxpayer most directly gains or produces his or her assessable income (Charles Moore & Co (WA) Pty Ltd v FC of T (1956) 95 CLR 344; (1956) 11 ATD 147).

Paragraph 9 of TR 96/18 provides that the cost of cosmetics and other personal grooming expenses will in most circumstances, be regarded as an expense of a private nature. Generally, in most cases, a connection would not exist between the expense of cosmetics and personal grooming, which includes hair styling and hair colouring (paragraph 3 of TR 96/18), and the gaining of assessable income.

Paragraphs 6 and 13 of TR 96/18 say that it is accepted that a deduction may be allowable for a performing artist incurred on some stage make-up and grooming expenses, such as a particular hairstyle or length, for a particular role. For the performing artist there is a connection between the expense incurred and gaining their assessable income.

Taxation Ruling TR 95/20 Income tax: employee performing artists - allowances, reimbursements and work-related expenses considers deductions for work-related expenses generally claimed by employee performing artists including singers. A request by an employer to incur an expense does not mean that it is allowable, paragraph 34 of TR 95/20. It states at paragraph 109 that a deduction is not generally allowed for hairdressing, make-up and facials. A deduction is allowable for 'the cost of maintaining a particular style or length of hair as part of a costume for purposes of continuity', and for the cost of make-up and the cleansing materials to remove stage make-up.

Paragraphs 110 and 111 of TR 95/20 provide examples of when grooming is private and when it is not. The regular hair styling and beauty treatments incurred by Sophie who is an actress in a television series were regarded as private. Alex could claim a deduction for his hair to be cut shorter than he normally wears it and for the make-up for the role he performed in a stage play as there was a direct nexus between the expense and earning income as an actor.

Case L61, 79 ATC 488 involved an army officer who claimed a deduction for haircuts as the Army Dress Manual required that he have a certain type of haircut and that his hair be neat and groomed. In that case the Board of Review disallowed the claim as private expenditure and noted that the haircut required by the army regulations was virtually indistinguishable from the style of haircut common to members of the police force and to other sectors of the community such as process workers where trailing hair could be a hazard.

In your case, you are under no contractual requirement to undertake any specific grooming for a specific role or as part of a costume. While your manager has advised you to modify your grooming, this does not amount to a requirement for a specific role or costume as outlined above. You are able to perform your activities and obtain associated income without a particular grooming style.

While a particular grooming style may assist your marketing brand, the expense is not necessarily incurred in order to earn your income. The particular grooming style is a style acceptable to members of the community and easily worn across all sectors of the community. The grooming style has been requested so that you are recognisable. The grooming style can be worn while you are performing or in general public for any other activity other than work.

Accordingly, it is not accepted that a sufficient nexus exists between the expenditure in maintaining the grooming style and your income earning activities. This nexus is such that the essential character of the expense is private in nature. You are not entitled to a deduction for your grooming expenses under section 8-1 of the ITAA 1997.

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