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Ruling
Subject: Clothing expenses
Question
Is the company entitled to a deduction for conventional clothing?
Answer
No.
This ruling applies for the following period
Year ended 30 June 2012
The scheme commenced on
1 July 2011
Relevant facts
The key note speaker (the speaker) of the company has purchased clothing on their personal credit card for use in their role.
The company was set up but has not yet started trading.
The company will not reimburse the speaker for any of the cost of the clothing.
The speaker is the managing director of the company.
The speaker will regularly be on free to air television and community television as well as radio and also constantly in public view.
The speaker may change clothes several times per day when there are a number of engagements.
The image of the speaker is pivotal in their success in their role.
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 or are necessarily incurred in carrying on a business for the purpose of 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, or a provision of the ITAA 1997 prevents it.
In this case, while we accept that the clothing purchased may be for use by the speaker in their role for the company, the expenses have been incurred by the speaker.Therefore, as the company has not incurred the expense, a deduction is not allowed.