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Tuesday, 31 August 1993
Page: 686

(Question No. 126)


Senator Watson asked the Minister representing the Treasurer, upon notice, on 13 May 1993:

  With reference to the debate on the Taxation Laws Amendment Bill (No.6) 1992 (House of Representatives Hansard, 3 November 1992, p2444), during which the then Minister Assisting the Treasurer (Mr Baldwin) stated that `the new rules will not operate to deny a deduction for clothing worn to protect employees from injury, or their normal clothing from injury':

  (1) Does the ruling TD 92/157 deny the deduction for the majority of clothing worn to protect employees from injury at work even if the wearing of that clothing is a condition of the employment required under State law relating to workplace health and safety, for example, a worker on a natural gas pipeline, required to wear certain work gear cannot claim for his or her Yakka or King Gee overalls or trousers.

  (2) Is this ruling in direct contradiction to the statement made by Mr Baldwin during the debate on the Taxation Laws Amendment Bill (No.6) 1992.


Senator McMullan —The Treasurer has provided the following answer to the honourable senator's question:

  (1) Taxation Laws Amendment Act (No.6) 1992 (Act No.227 of 1992) introduced section 51AL of the Income Tax Assessment Act 1936 which will tighten the conditions under which an employee can claim a deduction for costs incurred in relation to non-compulsory clothing.

  Clothing worn to protect employees from injury, or their normal clothing from damage, is specifically exempted from the operation of section 51AL. However, protective clothing must still satisfy subsection 51(1) (i.e. the clothing must not be conventional or private in nature) if the costs associated with the clothing are to be deductible.

  The recent Taxation Determination TD 92/157 dealing with heavy duty clothing is based on a 1986 Administrative Appeal Tribunal decision reported as Case T103 86 ATC 1182.

  The Tribunal in that case determined that jeans, drill trousers and drill shirts were `. . . ordinary conventional clothes which have no peculiar characteristics as protective clothing'.

  In addition, if the wearing of such clothes is a condition of employment a deduction is still not available to an employee as the Senior Member of the Tribunal also decided that `on the whole of the evidence I am not satisfied that these garments have a sufficiently distinctive characteristic to take them out of the character of "conventional clothing".'

  These types of clothes therefore, fail to provide the necessary protective quality that would allow them to be considered as deductible.

  This can be contrasted with the wearing of overalls by a mechanic over his/her normal clothes. In these cases, the overalls provide protection for the mechanic's normal clothing from damage in the work environment. In such circumstances the cost of providing and maintaining the overalls is deductible.

  (2) Clearly the Taxation Determination is not a contradiction of the statements made by Mr Baldwin during the debate on the Taxation Laws Amendment Act (No.6) 1992.