Edited version of your written advice

Authorisation Number: 1051493187119

Date of advice: 12 March 2019

Ruling

Subject: Work-related expenses – performing artist

Question

As a performing artist are you able to claim a deduction under section 8-1 of the Income Tax Assessment Act (ITAA 1997) for hair treatment expenses incurred while you are contracted to maintain a particular hairstyle required for a specific role?

Answer

Yes.

This ruling applies for the following periods:

Year ended 30 June 2017

Year ended 30 June 2018

Year ending 30 June 2019

The scheme commences on:

1 July 2017

Relevant facts and circumstances

This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling.

You work as a performing artist

You undertake hair treatment to prevent hair loss and to maintain the hair you have.

You take 2 tablets daily, apply a solution directly to your scalp nightly, wash with specialised shampoo/conditioner and have a laser hat to promote hair follicles.

You started the hair treatment around September / October 20XX.

When you started the treatment you had just finished a contract where you began to lose hair. Knowing you would be severely lowering your chance of employment if you didn’t do anything about it. The jobs you did end up getting all required you to have hair and maintain what you have.

You are contractually required to maintain your appearance in order for you to keep your role. Specifically your hair is needed to be maintained for the roles you perform, without which you would not be able to perform in these roles and obtain the associated income.

You have two contracts to perform an ensemble and understudy role for Production A. One contract is for locations in City A and City B and the other contract is for City C and City D.

These contracts state the following at section B:

Conduct:

II) It is agreed that the Performer shall not cut their hair from the execution of this Agreement until advised by the Employer of the Play that they requires it cut, styled and coloured in a manner required by the production of the Play.

III) The Performer shall maintain such hair style required by the production of the Play throughout the term of this Agreement.

You have a contract to perform an ensemble role for Production B.

This contract states the following at section 5:

Performer Requirements:

5.5) The Performer is required to grow his or her hair at the earliest opportunity prior to the commencement of the Engagement to provide the Employer with the ability to style the Performer’s hair for the Production.

5.6) The Performer agrees to have his or her hair cut and styled to the production design including colour if required by the Employer and at the Employer’s cost.

5.7) The Performer shall not alter the agreed style of his or her hair without the permission of the Employer or the Employer’s nominated representative.

The person in charge of hair and makeup for one of your employers has confirmed in writing that you need to maintain your hair and colour to suit your character and the treatment is needed to do this.

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, except where the outgoings are of a capital, private or domestic nature, or relate to the earning of exempt income.

A deduction is only allowable if it:

● is actually incurred,

● meets the deductibility tests, and

● satisfies the substantiation rules.

To establish a connection, it must be shown that the outgoing is relevant and incidental to the gaining of assessable income.

Taxation Ruling TR 96/18 Income Tax: Cosmetics and other personal grooming expenses considers the deductibility of cosmetics and personal grooming related expenses, including beauty products. TR 96/18 states that as a general rule, expenditure on cosmetics and personal care and grooming is private in nature and is not deductible.

There are some exceptions to this rule, such as a performing artist who is required to maintain hair and make-up for a particular role or in circumstances where a taxpayer is required to work in harsh working conditions. However, there is an onus on the taxpayer to prove that such an outlay should be an allowable deduction.

Taxation Ruling TR 95/20 Income tax: employee performing artists - allowances, reimbursements and work-related expenses considers deductions for work-related expenses generally claimed by employee performing artists. Paragraph 109 of TR 95/20 states that a deduction is allowable for the cost of a particular hairstyle if an employee performing artist is required to have a particular hairstyle for a role. Additionally, the cost of hairdressing incurred specifically to maintain a required hair length as part of a costume, e.g., for continuity purposes, is an allowable deduction

You however cannot claim a deduction for the cost of hair treatment and hairdressing that are private expenses not relating to your role or costume.

In establishing a connection, it must be shown that the outgoing is relevant and incidental to the gaining of assessable income.

In your case you are able to show that your hair treatment is an essential element of you being able to maintain a certain hair style required for your roles. The relevant contract clauses outline these hairstyle requirements. Additionally, the person in charge of hair and makeup for one of your employers has confirmed in writing that you need to maintain your hair and colour to suit your character and the treatment is needed to do this. Therefore, we believe there is a sufficient connection between your hair treatment and your income earning activities.

In summary, as a performing artist, you can claim a deduction for the cost of a particular hairstyle if it is required for a role. You can claim a deduction for the cost of hairdressing specifically to maintain a required hair length or style as part of a costume for continuity purposes.

Therefore, as a performing artist you are able to claim a deduction under section 8-1 of the ITAA 1997 for hair treatment expenses incurred while you are earning your assessable income and contracted to maintain a particular hairstyle required for a specific role.