Edited version of your private ruling

Authorisation Number: 1012568924125

Ruling

Subject: Conventional clothing

Question

Are you entitled to a deduction for the cost of buying or hiring and maintaining a formal wear wardrobe?

Answer

No.

This ruling applies for the following period

Year ended 30 June 2014

The scheme commenced on

1 July 2013

Relevant facts

You are a performer.

You wear evening gowns and costume gowns as part of your performances.

The gowns are made for specific occasions by fashion designers. You also wear gowns purchased at regular shops.

You are seldom required to change costume during shows. However, on one occasion, you did have a change during the show.

The dresses are purchased solely for engagements and are kept completely separate from your usual wardrobe.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 8-1

Reasons for decision

Section 8-1 of the Income Tax Assessment Act 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 considers the deductibility of work related clothing, uniform and footwear expenses.

The ruling states that generally the cost of buying clothing will be regarded as an expense of a private nature. Clothing is necessary for protection of the body from the elements and to meet social norms of modesty, fashion or similar conditions.

TR 97/12 also considers the deductibility of conventional clothing. Conventional clothing is everyday clothing that would ordinarily be worn, or which could reasonably be worn, by a person irrespective of whether that person is working or not, for example, a pair of jeans or a shirt.

TR 97/12 states that expenditure on conventional clothing is often not an allowable deduction as there is not usually a sufficient connection between the expenditure and the income earning activities of a taxpayer.

Factors that are relevant to the question of whether a sufficient connection exists so that the essential character of the expense is work related rather than private in nature include:

· express or implied requirements of the employer or business concerning clothing;

· the extent to which the clothing is distinctive or unique to the nature of the employment or business having regard to particular, special or accepted work clothing requirements, including its availability to be worn by members of the general public;

· the extent to which the clothing is worn solely for work;

· the extent to which the clothing is unsuitable for any activity other than work.

A deduction for conventional clothing was allowed in Federal Commissioner of Taxation v. Edwards 94 ATC 4255; 28 ATR 87 (Edward's case). In Edward's case, the taxpayer worked as the personal secretary to the wife of the Governor of Queensland.  She sought a deduction for expenses incurred in purchasing hats, gloves and formal gowns which she was required to purchase to fulfil the duties of her position.  The taxpayer was expected to dress in a manner compatible with the Governor's wife.  It was determined that the additional clothing purchased was over and above the personal requirements of her normal attire for private use. 

Whilst the additional nature of the clothing is a relevant factor to be taken into account, it will not be sufficient where the income earning activities do not turn upon the wearing of the additional clothes and where they are not specific and suited only for the income earning activity. 

You stated that your situation was similar to the examples in Taxation Ruling TR 94/22 of Neil and Gail who were allowed a deduction for the purchase clothing to be worn as costumes to represent particular characters in particular productions.

Your case can be distinguished from Neil and Gail in that your dresses and gowns are not used to represent a character or period in your performance. The gowns do no more than clothe you in a manner suitable for performing your songs; they are not distinctive or unique to the nature of your duties and they are gowns available to be worn by other members of the general public.

While it is accepted that the gowns you wear may be of a very high standard, they are not considered to be costumes.

Supporting the argument that the gowns are not costumes to represent a particular character, is that you do not have to change your gown for the different songs you perform during a show. Your case is similar to that of a barrister who is required to wear a formal suit when in court.

Consequently, you are not entitled to a deduction for the cost of gowns worn while performing.