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Edited version of private ruling
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Ruling
Subject: Work-related expenses
Are you entitled to a deduction for clothing you are required to purchase and wear from the store for which you work?
No.
This ruling applies for the following period:
Year ended 30 June 2010
The scheme commenced on:
1 July 2009
Relevant facts and circumstances
You are required to wear the clothing from the store at which you work.
You have an agreement with your employer which states you must wear the clothing and if you don't you will be sent home and you will not be paid until you commence wearing the clothing again.
You have spent $x,xxx on clothing from the store.
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 any loss or outgoing to the extent that it is incurred in gaining or producing your assessable income. However, you cannot deduct a loss or outgoing under this section to the extent that:
· it is a loss or outgoing of capital, or of a capital nature; or
· it is a loss or outgoing of a private or domestic nature; or
· it is incurred in relation to gaining or producing your exempt income; or
· a provision of this Act prevents you from deducting it.
The Commissioner has issued a number of occupation-based rulings on work related expenses claims. Taxation Ruling TR 95/10 - Income Tax: Employee Shop Assistants contains the Commissioner's view of the application of those principles to deductions claimed by shop assistants.
Paragraph 70 of Taxation Ruling 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 are required to wear the store clothing as a condition of employment. However, the clothing is not protective in nature, occupation specific, or a compulsory uniform, nor is it non-compulsory clothing that is registered under the Approved Occupational Clothing Index with the Department of Industry, Science and Resources. It does not have a specific company logo and as such, is suitable for 'street' wear which means it can be worn by the general public, not specifically those employed at the store.
The expenditure you have incurred on the purchase of conventional items of clothing cannot be essentially characterised as an outgoing incurred in gaining assessable income, as there is no direct nexus between the expenditure and the gaining or producing of assessable income. Even though the expenditure is a prerequisite to the derivation of your income, this does not alter the private nature of the expenditure.
The expenses incurred by you on clothing, are of a private nature and are not deductible under section 8-1 of ITAA 1997.