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Edited version of your written advice
Authorisation Number: 1012902788658
Date of advice: 28 October 2015
Ruling
Subject: Work related clothing
Question 1
Are you entitled to claim a deduction for the cost of clothing that you are required to wear in your employment at a fashion boutique?
Answer
No
This ruling applies for the following period:
Year ended 30 June 2015
The scheme commenced on:
1 July 2014
Relevant facts and circumstances
You are employed at a retail fashion boutique. Your employer requires you to wear currently fashionable clothing that is available in the retail outlet when you are working in the store. The requirement is prescribed in the company rules and regulations.
The specific clothing range worn whilst performing your duties is no different to that sold to arm's length customers and does not identify you as an employee.
There is a strictly enforced policy whereby it is compulsory for you to wear the latest fashion collection at work and purchase all items of clothing worn while at work from your employer.
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 that they are incurred in gaining and 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, uniforms and footwear. The ruling states that expenditure on a compulsory and distinctive uniform/wardrobe is allowable as the compulsory and distinctive characteristics provide the necessary connection between the expense and the work activity.
An employer requirement that an employee wear a particular type or style of clothing is not in itself sufficient to make the expenditure deductible. Other factors that need to be considered are:
• The extent to which the clothing is distinctive or unique to the nature of the employment;
• The clothing's availability to be worn by members of the public; and
• The extent to which the clothing is unsuitable for any activity other than work.
Taxation Ruling TR 95/10 states at paragraph 70:
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 or producing assessable income and is of a private nature.
There is not a sufficient connection between your clothing expenditure and your income producing activity. The clothing is not distinctive or unique to the nature of your employment and is indistinguishable from the clothing that is actually sold to the public.
Being fashion clothing that is available and intended to be worn by members of the public, the expenditure incurred is private in nature and therefore not deductible under section 8-1 of the ITAA 1997.