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The Administrative Appeals Tribunal (AAT) has held that the CEO and director of a company was not entitled to a deduction of approximately $38,800 for abnormal work-related clothing expenses on the basis that the expenditure was not incidental and relevant to her earning assessable income.
The taxpayer had argued that while there was no written employment agreement with the company, and there was nothing in her conditions of employment which required her to wear any specific type of clothing she was the face of the company. The taxpayer contended that she would not have incurred the abnormal expenditure if not for what she perceived as the need to present the required image.
In seeking to obtain this deduction, the taxpayer sought to rely on the full Federal Court decision in the Edwards’ case (94 ATC 4255). The AAT however held that in the Edwards’ case there was a clear connection between the clothing expenditure and income earning activities – a fact which did not exist here.
Merely because the taxpayer aimed to present a certain image and her clothing had to be suitable for her employment was not sufficient to change the character of the expense from a private to a business expense.
The AAT noted that all of the clothing items purchased by the taxpayer were conventional in nature — the clothing was not distinctive or unique, could be worn on any occasion including private and social occasions and was easily available to the public.
In general you cannot claim a deduction for conventional clothing that forms part of a uniform even if your employer requires you to wear them. For example a bartender wearing black pants and a white shirt or a sales assistant wearing an employer's brand name conventional clothing, such as a t-shirt, as a condition of employment are not deductible.
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