Edited version of your written advice

Authorisation Number: 1051333610255

Date of advice: 6 February 2018

Ruling

Subject: Work relates expenses

Question 1

Are you entitled to a deduction for the cost of your cosmetic procedures under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997)?

Answer

No.

Question 2

Are you entitled to a deduction for the cost of your occupation specific clothing under section 8-1 of ITAA 1997?

Answer

Yes.

This ruling applies for the following periods:

Year ended 30 June 20XX

Year ended 30 June 20XX

Year ended 30 June 20XX

Year ended 30 June 20XX

The scheme commences on:

1 July 20XX

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 8-1.

Reasons for decision

Section 8-1 of the 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.

The courts have considered the meaning of 'incurred in gaining or producing assessable income'. In Ronpibon Tin NL Tong Kah Compound NL v. Federal Commissioner of Taxation (1949) 78 CLR 47; 56 ALR 785; 8 ATD 431 the High Court stated that:

For expenditure to form an allowable deduction as an outgoing incurred in gaining or producing assessable it must be incidental and relevant to that end. The words "incurred in gaining or producing the assessable income" mean in the course of gaining or producing such income.

Medical expenses have no direct connection to the gaining or producing of assessable income. There is insufficient connection to the gaining or production of assessable income for a deduction to be allowed as the expenditure is too remote.

Additionally, medical expenses can be characterised as being of a private nature and therefore can also be excluded on that ground.

In your case, although you may believe the purpose of the medical procedures may help to improve your income earning activities, this does not change the private nature of the expenses incurred. There is no direct connection between the costs of the medical procedures and the derivation of your income from that employment.

You are therefore not entitled to a deduction for the medical expenses incurred under section 8-1 of the ITAA 1997.

Clothing

Clothing and laundry expenses are deductible under section 8-1 of the ITAA 1997 where they have a relevant connection to the taxpayer's current income earning activities.

Taxation Ruling TR 95/15 states that a deduction for the cost of buying and cleaning a uniform may be allowable where the uniform is either:

● protective;

● occupation specific;

● compulsory; or

● non-compulsory, registered with the Secretary to the Department of Industry, Science and Tourism.

To be considered occupation specific the uniform must distinctly identify the employee as belonging to a particular profession, trade, vocation, occupation or calling. It is not clothing that can be described as ordinary clothing of a type usually worn by men and women regardless of their occupation. Examples of clothing that are considered to be occupation specific are female nurse’s traditional uniforms, chefs’ checked pants and a religious cleric’s ceremonial robes.

In your case, your uniform consists of occupation specific clothing which can be considered to be sufficiently distinctive to identify you as working in a particular occupation. Therefore you are entitled to a deduction for the cost of your costumes and lingerie under section 8-1 of the ITAA 1997.