Edited version of your private ruling

Authorisation Number: 1051638298580

Date of advice: 20 February 2020

Ruling

Subject: Income tax - deductions

Question 1

Can you claim a uniform deduction for yourX branded clothes and Y shoes?

Answer

No.

Question 2

Can you claim a deduction for your gym membership?

Answer

Yes.

Question 3

Can you claim a deduction for intended self-education expenses in courses Certificate III and Certificate IV in Fitness?

Answer

No.

This ruling applies for the following periods:

Year ended 30 June 20XX

Year ended 30 June 20XX

Year ended 30 June 20XX

The scheme commences on:

1 July 20XX

Relevant facts and circumstances

You are employed as Group Fitness Instructor.

It is a requirement of your employment that you are qualified as a Group Exercise Leader.

You have obtained your qualification by completing subjects which fulfil the requirement for a Group Exercise Leader.

These subjects form components of the Certificate III in Fitness.

You have completed X training in order to deliver licensed X workouts to group class participants.

X have branded gym clothes through their exclusive partnership with Y which you have purchased to wear while you deliver these licensed X workouts.

You deliver up to 16 group classes each week.

Your role means that you are responsible for the health and safety of your group class participants by modelling the correct form and technique.

When delivering a class, you are required to teach participants the workout techniques while performing the workout yourself.

You have a commercial gym membership.

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 losses and outgoings which are incurred in the course of gaining or producing assessable income, except where the outgoings are of a capital, private or domestic nature.

Compulsory uniforms

A compulsory uniform or corporate wardrobe is a collection of items that:

·         Distinctly identifies an employee as part of a particular organisation

·         An employer makes it a condition of service to wear those items.

It is the compulsory and distinctive characteristics that form a sufficient connection between the expenditure on the uniform and the work activity making this expense allowable as a general deduction.

Taxation Ruling TR 97/12 Income tax and fringe benefits tax: work related expenses: deductibility of expenses on clothing, uniform and footwear considers the deductibility of work related clothing, uniform and footwear. The ruling states that expenditure on a compulsory and distinctive uniform or corporate wardrobe is allowable as the compulsory and distinctive characteristics provide the connection between the expenditure and the work activity.

A compulsory uniform or wardrobe is clothing that an employer has prescribed in an expressed policy that makes it a requirement for employees to wear that type of clothing while at work. The policy must stipulate the characteristics of the colour, style and type of clothing and accessories that make up the uniform or wardrobe and its distinctiveness. The clothing must identify to the casual observer, the person as being a particular employee of the employer.

Taxation Determination TD 1999/62 Income tax: what are the criteria to be considered in deciding whether clothing items constitute a compulsory corporate uniform/wardrobe for the purposes of paragraph 30 of Taxation Ruling TR 97/12? provides details of the requirements for clothing to be considered a 'compulsory uniform/wardrobe'. A compulsory uniform/wardrobe must be prescribed by the employer in an expressed policy that makes it a requirement for a particular class of employees to wear that uniform while at work, and which identifies the relevant employer.

TD 1999/62 also discusses corporate identifiers such as logos, initials or insignias. It describes these as features that readily identify a particular organisation or employer and add to the distinctive and unique nature of a uniform or corporate wardrobe.

In your case, your employer is a company. You deliver X licensed workouts to group class participants. X have branded gym clothes available for purchase through their exclusive partnership with Y. You are not an employee of X or Y; therefore you cannot claim a deduction for the X branded gym clothes you have purchased.

Gym membership

The Commissioner generally takes the view that expenses incurred in keeping fit are inherently private in nature as it ultimately involves the person's own physical wellbeing. This position does not change even if the person is employed to undertake physical activity as part of their duties.

Taxation Determination TD 93/114 Income tax: is a police officer, who is required to maintain an adequate level of physical fitness in order to undertake police duties, entitled to claim a deduction for fitness related expenditure states that where police duties do not require an officer to undertake regular strenuous physical activity, expenses of keeping fit are not deductible.

TD 93/114 also discusses that there may be circumstances where such expenditure is an essential element of gaining income, such as where strenuous physical activity is an essential and regular element of performing that officer's duties. It is considered that a police academy physical instructor may be in this category.

In your case, your role of Group Fitness Instructor means strenuous physical activity is an essential and regular element of performing your role. You pay for a commercial gym membership to ensure you are at peak physical condition to be able to perform your employment duties. Therefore as there is a direct connection between the expenses and the gaining of your assessable income, you are able to claim this expense as a deduction.

Self-education expenses

Taxation Ruling TR 98/9 Income tax: deductibility of self-education expenses incurred by an employee or a person in business discusses circumstances in which self-education expenses are allowable as a deduction under section 8-1 of the ITAA 1997. If a taxpayer's current income-earning activities are based on the exercise of a skill or some specific knowledge and the self-education enables the taxpayer to maintain or improve that skill or knowledge, the self-education expenses are allowable as a deduction.

Therefore, provided there is sufficient connection between a course of self-education and current income earning activities, you are entitled to claim a deduction for your self-education expenses.

However, self-education expenses will not be deductible if the study is intended to:

·         enable you to get employment

·         enable you to obtain new employment, or

·         to open up a new income-earning activity (whether in business or in your current employment).

Paragraph 48 of TR 98/9 refers to the decision of the High Court in FC of T v. Maddalena 71 ATC 4161; (1971) 2 ATR 541 (Maddalena's Case). That case established that no deduction is allowable for self-education expenses if the study is designed to enable a taxpayer to get employment or to obtain new employment. The expenses would be incurred at a point too soon to be regarded as incurred in gaining or producing assessable income.

In your case, you are employed as a Group Fitness Instructor for a company. Completion of a Certificate III in Fitness will qualify you as a Gym Instructor. Additionally the completion of a Certificate IV in Fitness will qualify you as a Personal Trainer. As these qualifications enable you to open up new income-earning activities in different roles and not the maintenance or improvement of your current employment, a deduction is not allowable as it is considered your intended study is a point too soon.