When considering topics to write, my starting point is “what questions or discussions do I regularly have with clients?” One issue I have had with almost every client I have seen relates to claiming clothing and uniform expenses against their business or wage income.
The starting point for any deduction is it must be incurred in generating assessable income. This means that the clothes must be worn in your business or job, and not worn privately.
Even if your clothing is used in your business or job, the default position is ‘conventional clothing’ is not a deductible expense. Examples of ‘conventional clothing’ are jeans, drill shorts and shirts, and business attire.
For clothing to be deductible, it must be either a compulsory uniform, a non-compulsory uniform or protective clothing.
A compulsory uniform is clothing that identifies you as an employee of an organization. The employer must make it compulsory to wear the uniform through a strictly enforced workplace agreement or policy.
A non-compulsory uniform can only be claimed if the employer has registered the design with AusIndustry and is on the Register of Approved Occupational Clothing.
Protective clothing is quite common for primary producers, due to the risks faced in the work environment. To be considered protective, the clothing must have protective features and functions, and also provide a sufficient degree of protection against specific risks you are exposed to in carrying out your work. Examples of protective clothing includes fire-resistant clothing, sun-protection clothing with a UPF sun protection rating, safety-coloured vests and steel-capped boots.
For most primary producers, jeans are a common item of clothing. As stated above, jeans are in nature ‘conventional clothing’ and are not deductible. Therefore, to be deductible, they need to have added protective features, such as jeans which repel lanolin for shearers or offer extra protection for riding horses.
Also, basic drill shorts and shirts are not deductible. To be deductible, these must either be made from heavy duty fabric which protects the wearer from risk of injury or illness, or have a density of weave which gives a UV rating sufficient to protect you from the sun.