Edited version of private ruling

Authorisation Number: 1011899475418

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Ruling

Subject: Clothing expenses

Question 1

Are you entitled to a deduction for the cost of clothing worn for work purposes?

Answer

No

This ruling applies for the following periods:

Year ended 30 June 2011

Year ended 30 June 2012

The scheme commenced on:

1 July 2010

Relevant facts and circumstances

You are employed as a covert loss prevention officer.

You are required to wear conventional clothing to work.

You purchase various conventional clothes so you are able to change your appearance to blend into the area you are working in on a day to day basis.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 8-1.

Reasons for decision

Summary

There is an insufficient connection between the expense you have incurred on conventional clothing and your income earning activities. These expenses are private in nature and you are therefore not entitled to a deduction for your expenses for conventional clothing.

Detailed reasoning

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, or relate to the earning of exempt income.

For expenditure to be deductible, the expenditure must have the essential character of an outgoing incurred in gaining assessable income. It is not sufficient that the expenditure is a prerequisite to the derivation of assessable income; it must contribute to the derivation of that income.

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 as it satisfies the taxpayer's need for decency, modesty and warmth. 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).

TR 97/12 also states that the fact that an employer may expect or require an employee to dress in a certain manner or the fact that a taxpayer may perceive that it is important to his/her success in his/her occupation to wear a particular type or style of conventional clothing does not make the cost of that clothing deductible (paragraph 21 and 22).

In your circumstances it is acknowledged that you are required to wear conventional clothing to perform your work duties on a day to day basis however, the clothing you wear is not distinctive to your occupation nor is it protective in nature. The expenditure you incur for conventional clothing is a prerequisite to the earning of your income, it does not have a sufficient connection to the earning of that income. The expenditure you have incurred in relation to conventional clothing is a private expense; therefore you are not entitled to a deduction under section 8-1 of the ITAA 1997.