1. The Tribunal notes that, according to section 900-15(1) of the ITAA1997, to deduct a work expense, it must qualify as a deduction under some provision of this Act outside Division 900 and the taxpayer needs to substantiate it by getting written evidence. Accordingly, the first issue to be considered is whether the outgoings qualify as a deduction under section 8-1 of the ITAA1997. That is, whether the applicant has established the required nexus between those outgoings and the derivation of her employment income under section 8-1 of the ITAA1997. Specifically, whether the outgoings in question were incurred by the applicant in gaining or producing her assessable income and were not of a capital, private or domestic nature.
2. In considering the issue noted at [11] above, the Tribunal also needs to consider whether, in the case of those outgoings that have a mixed character or serve a dual purpose (i.e. were incurred in gaining or producing assessable income but are also private or domestic in nature), the basis of apportionment relied upon by the applicant with a view to deducting only that part of the outgoing attributable to the gaining or producing assessable income, is appropriate. However, a consideration of the basis of apportionment is not necessary where the Tribunal finds that the applicant has not established the required nexus under section 8-1 of the ITAA1997.
3. If the Tribunal finds that the outgoings qualify as a deduction under section 8-1 of the ITAA1997 and that the basis of any applicable apportionment applied by the applicant is appropriate, the Tribunal finally needs to consider whether the outgoings in question were actually incurred and whether the applicant has satisfied the written substantiation requirements of Division 900 of the ITAA1997 or is otherwise entitled to relief from substantiation.
4. The Respondent does not agree to confine the issues in dispute, to any extent.
5. At the beginning of the hearing, the applicant conceded and withdrew her claims for the deduction of the D2 outgoings in question (i.e. the work-related travel expenses (including parking, taxi, and toll expenses) (amounting to $3,866)) as well as for the deduction of the D5 outgoings in question (i.e. the other work-related expenses (computer supplies, makeup, printing and stationery) (amounting to $9,955)). However, she continued to maintain her claim for the deduction of the D3 work related clothing expenses (amounting to $29,221). She did so on the basis that the documentation submitted to the Tribunal and put into evidence (the Respondent's Tribunal Book) confirmed proper substantiation of these expenses and on the basis that these were expenses that she was compulsorily required to incur by her employer in that in performing her employment role she is required to wear branded clothing as a corporate uniform and that failure to wear her employer's branded clothing while performing her employment duties would result in her being reprimanded. However, she also conceded that the clothing expenses have a dual purpose/mixed character (in that the relevant clothing can be worn both at work and in the applicant's non-work time). Accordingly, she argued that a general five sevenths apportionment should be applied to the deduction for the clothing expenses (five day working week and two day weekend non-work time).
6. The Commissioner's position is that, as regards the deduction claimed by the applicant for the D3 work related clothing expenses, the applicant has failed to discharge the burden of proof applying to her on two grounds. The first ground is that the applicant has failed to provide sufficient and correct written documentary evidence that she has incurred the outgoings, pursuant to section 900-15 of the ITAA1997. For example, the applicant relies only on bank statements to evidence a substantial portion of the D3 work related clothing expenses, which only show general, aggregated amounts being transferred to various department stores, and do not prove or particularise the specific items which the applicant claims are deductible. In further support of this first ground, the Respondent also pointed to certain instances in the written documentary evidence submitted by the applicant in support of her claims, where the applicant claimed deductions under the D3 category for clothing items whose brand did not correspond to the brands supported by the applicant's employer, for clothing items that do not conform with the employer's dress code policy and for items that are not clothing (such as hairdressing and textiles).
7. The second ground upon which the Respondent argues that the applicant has failed to discharge the burden of proof applying to her concerns the issue of whether the claimed clothing expenses were incurred in the course of gaining or producing the applicant's assessable income (the section 8-1 ITAA1997 nexus requirement). The Respondent argues that the applicant has failed to establish nexus for these expenses. Specifically, the applicant has failed to provide documentary evidence confirming that the wearing of the branded clothing in the performance of her employment duties was a mandatory requirement of the applicant's employer or a condition of the applicant's employment. The only evidence provided by the applicant which supports this position is the applicant's oral evidence during the hearing. That evidence had not been provided to the Respondent in the lead up to the making of the objection decision by the Respondent which is under review in these proceedings. Moreover, and related to the nexus requirement, the applicant has failed to establish that the clothing expenses are not private in nature (section 8-1(2)(b) ITAA1997 prevents the applicant from deducting an outgoing to the extent that it is of a private or domestic nature).
8. The following issues must therefore be considered:

(a) Has the applicant proved that the assessment is excessive and what amount should have been assessed? This requires consideration of the following four questions: > > (b) Has the applicant proved, that the D3 work related clothing expenses she has claimed as a deduction, were incurred in the course of gaining or producing assessable income (i.e. have a nexus to the applicant's derivation of assessable income), as required by section 8-1(1)(a) of the ITAA1997? > > (c) Has the applicant proved, that the D3 work related clothing expenses she has claimed as a deduction, are not of a private or domestic nature, as required by section 8-1(2)(b) of the ITAA1997? > > (d) To the extent that the D3 work related clothing expenses the applicant has claimed as a deduction serve a dual purpose or are of a mixed character (i.e. they have a nexus to applicant's derivation of assessable income as well as having a private or domestic nature), has the applicant proved that the claimed deduction amounts have been apportioned on a reasonable basis, as required by section 8-1 of the ITAA1997? > > (e) If (b), (c) and (d) above have been proved, the Tribunal is then required to determine whether the applicant has proved, in accordance with the substantiation requirements of subdivision 900-B of the ITAA1997, that the D3 work related clothing expenses that she has claimed as a deduction were properly and correctly incurred. > > THE EVIDENCE

9. The applicant did not submit any witness statements to the Tribunal, nor did she provide a hearing certificate indicating that witnesses would be called on her behalf. The applicant's representative was consequently asked at the beginning of the hearing as to her plans regarding the discharge of the burden of proof applying to the applicant. The representative responded that the applicant would be relying on the documentary evidence already submitted to the Tribunal as the bulk of the Respondent's Tribunal Book and that the representative would be making submissions with respect to that documentary evidence. The applicant's representative also confirmed that the applicant was available during the hearing to provide any clarifications that might be required. Accordingly (and with the Respondent's consent), the Respondent's Tribunal Book was included in evidence before the Tribunal as Exhibit 1 and the applicant gave the affirmation administered by the Tribunal. The evidence under consideration by the Tribunal consequently comprises the bulk of the documents contained in Exhibit 1 and the oral evidence given by the applicant during the hearing.
10. A fair summary of the applicant's oral evidence has already been noted at [2] and [15] above.

HAS THE APPLICANT PROVED THAT THE D3 WORK RELATED CLOTHING EXPENSES THAT SHE HAS CLAIMED AS A DEDUCTION, WERE INCURRED IN THE COURSE OF GAINING OR PRODUCING ASSESSABLE INCOME (I.E HAVE A NEXUS TO THE APPLICANT'S DERIVATION OF ASSESSABLE INCOME) AS REQUIRED BY SECTION 8-1(1)(a) OF THE ITAA1997?

1. This is not an easy question to answer. As was pointed out by Hill J in Mansfield v FCT:

'It must be conceded that it is difficult to express as a general principle the circumstances when expenditure on clothing may be deductible and those circumstances when it will not be. The mere fact that a particular form of clothing is required to be used in an occupation or profession will not necessarily lead to the conclusion that expenditure on that form of clothing was deductible.'[3]

1. The answer to this question is highly fact specific and depends critically on the facts which, based on the evidence submitted by the applicant as part of the discharge of the burden of proof applying to her, the Tribunal considers that the applicant has proven.
2. Based on the documentary evidence contained in Exhibit 1 and on the applicant's oral evidence submitted during the hearing, the Tribunal finds that the applicant has proved the following facts.
3. During the relevant year in question (1 July 2023 to 30 June 2024), the applicant described her main salary and wage occupation in her tax return as 'Training Officer'.[4]However, following the audit of her return by the Respondent, the applicant referred to her occupation title as 'Learning and Development Manager, Australia and New Zealand'.[5]Her contract of employment indicates that, on 13 September 2021, she commenced employment with PVH Brands Australia as a 'Learning and Development (L&D) Specialist'.[6]In her oral evidence during the hearing, she also claimed that she is a member of her employer's senior management. The Tribunal accepts this claim and accordingly finds that the applicant is a senior manager with PVH Brands Australia, specialising in a learning and development role.
4. The Tribunal also finds that in performing this role, the applicant's duties and responsibilities (i.e. her income earning activities) are those which are identified in the job advertisement that the applicant responded to[7]and in Schedule A of her employment contract.[8]These include the implementation, communication, development and delivery of an annual training plan, whereby the applicant is responsible for coordinating training logistics, requirements, resources and key metrics to measure the effectiveness of training sessions; the facilitation and delivery of L&D programs for employees in an enthusiastic, engaging and motivating manner utilizing digital technology, creating and reinforcing a life-long learning culture; the demonstration of the effectiveness of L&D programs through conducting post-implementation reviews and providing training reports, including mentoring, coaching and training activities; and the maintenance of internal and external relationships and administration with employees, leaders, software companies and external training providers. However, the Tribunal finds that the lists of duties and responsibilities contained in the job advertisement and in Schedule A make no mention of the applicant being obliged to wear, as part of the performance of her employment duties, brands of clothing which correspond to those global iconic brands (such as Calvin Klein and Tommy Hilfiger) which the applicant's employer, as one of the world's largest and most admired fashion companies, connects to consumers in over forty countries.[9]
5. The applicant has attempted to fill this gap by submitting into evidence certain other documents contained in Exhibit 1 and through the oral evidence she provided during the hearing. These other documents are the email she sent to her representative in response to the audit of her tax return,[10]her employer's presentation and dress code policy[11]and an email from her employer confirming that, in her employment role with PVH, she is also a 'Brand Ambassador' and entitled to a $1000 per season clothing allowance.[12]In her oral evidence during the hearing, she claimed that she is her employer's one and only 'Brand Ambassador Learning Development' and that, as such, she is obliged to wear her employer's brands and that if she fails to do so she would be reprimanded.
6. Given the evidence noted at [26] above, the Tribunal accepts that in her employed role with PVH, the applicant is indeed a 'Brand Ambassador'. However, it is consequently necessary for the Tribunal to make a factual determination as to what duties and responsibilities are required to be performed by the applicant as a 'Brand Ambassador' and whether these duties and responsibilities impose a compulsory obligation on the applicant to wear the employer's brands when performing her employment duties and whether failure to do so would result in her being reprimanded.
7. In this regard, the Tribunal finds the following helpful. Firstly, in her email to her representative, the applicant pointed out that:

'In my role as Learning & Development Manager I am very much seen as the 'face' of the brands. I am regularly presenting and facilitating to both internal and external stakeholders (both onsite and offsite) and PVH Brands expects high standards of personal presentation aligned to the company's preferred dress guidelines. Representing two large and well-known international fashion/lifestyle brands, high standards of personal grooming are also expected of me every day, including my hair, makeup, and nails. In my customer facing role (I work with both internal and external customers and stakeholders), I am expected to wear branded Tommy Hilfiger and Calvin Klein clothing garments (and can mix and match these with other brands as required) and branded accessories (bags, shoes, scarves etc) each day, including any work from home days where I am regularly representing the Tommy Hilfiger and Calvin Klein brands on virtual Teams meetings (training, facilitating, and presenting) with cameras on. Our fashion brands deliver seasonal collections with a focus on regular 'newness', and therefore the branded garments that I wear must be current season to demonstrate accurate trends, and to reflect the new season merchandise that is on sale in both our retail and online stores for each brand.'[13]

1. Secondly, during the hearing, the applicant's representative submitted on the applicant's behalf that, in order for the applicant to do her job as a brand ambassador, she is required to present a particular 'look' during the course of performing her role and that the presentation of that 'look' constitutes part of the applicant's 'tools of trade'.
2. The claims noted at [28] and [29] above are partially corroborated by the employer's email to the applicant of 27 October 2021 which confirms that:

'[a] Brand Ambassador is someone who represents the business to external parties such as suppliers and clients, at VIP events and other representative occasions. For those in this position, you will be provided with an allowance per season based on your role. The allowance is provided to demonstrate the latest fashion elements of the Brand you are working with. If working across multiple brands you will be able to purchase items from both CK and TH stores.'[14]

1. Given the other duties and responsibilities that the applicant is required to perform in her employed role and which have been referred to at [25] above, given the nature of her employer's business and given also the evidence referred to at [30] above, the Tribunal finds the claims noted at [28] and [29] above, to be convincing. Accordingly, the Tribunal finds that, as a Brand Ambassador, the applicant's role with her employer requires her to be a 'face', that is, a representative, of her employer's brands to both internal and external stakeholders in her employer's business.
2. However, having made the finding at [31] above, it becomes necessary for the Tribunal to also assess the applicant's further claim (made during the hearing) that, as Brand Ambassador, she is obliged to always wear her employer's brands when performing her employment duties and that failure to do so would result in her being reprimanded. This claim was strongly contested by the Respondent on a number of grounds during the hearing. The Responded pointed out that the employer's email referred to at [30] above merely confirms the provision of a clothing allowance to the applicant from the employer but does not otherwise evidence that the wearing of the employer's brands during the performance of the applicant's employment duties and responsibilities is a mandatory/compulsory obligation. The Respondent also referred to the employer's presentation and dress code policy to make the point that, pursuant to section 5.3 of that policy, employees (who work for a particular brand) are not compulsorily required to wear that brand during the performance of their employment duties and responsibilities, but are merely 'suggested, encouraged and recommended' to do so.[15] Further, the Respondent stressed that the applicant had not submitted any corroborating documentary evidence from her employer supporting the position that the wearing of her employer's brands during the performance of her employment duties and responsibilities is a mandatory/compulsory obligation the breach of which would result in a reprimand. Moreover, the Respondent pointed out that this claim had not been made by the applicant in the lead up to the Respondent's objection decision and consequently the Respondent could not consider it when making the objection decision.
3. In response to the Respondent's contentions noted at [32] above, the applicant claimed that the employer's presentation and dress code policy applied to lower-level staff and that as a member of senior management, she is held to a higher standard where she is obliged to wear branded clothing during the performance of her employment duties and responsibilities. In response to the specific contention that she had not provided corroborating documentary evidence from her employer on this point, the applicant claimed that it is not feasible for her employer's human resources department to provide a written statement concerning presentation and dress code obligations for just a single role.
4. Given the Respondent's contentions at [32] above and the applicant's response at [33] above, the Tribunal makes the following findings. The applicant makes her own decisions as to what she wears during the performance of her employment duties and responsibilities. Also, the applicant is not under a definite contractual employment obligation to wear branded clothing during the performance of her employment duties and responsibilities and accordingly, the wearing of such clothing is not a condition of the applicant's employment. Further, the Tribunal is not satisfied that the applicant would be formally reprimanded under her employment contract for failure to wear branded clothing. Nevertheless, the Tribunal finds that the applicant perceives, subjectively and implicitly, that in order to perform her role with PVH Brands Australia, she is obliged to dress both correctly and well by wearing her choice of branded clothing. In making these findings, the Tribunal notes that the applicant is not an 'unusual case' (as was claimed by her representative in the hearing) but is in a similar position to that of the taxpayers in the following cases: Re Taxpayer and FCT [2006] AATA 100; [2006] 61 ATR 1192; AAT Case 8658 [1993] AATA 124; [1993] 25 ATR 1115; and AAT Case 11,455 [1996] AATA 441; 34 ATR 1098 - discussed further below at [43] to [49].
5. As regards the Tribunal's findings of fact in this case, a further factual determination concerns the applicant's claim that the branded clothing she is required to wear in the performance of her duties constitutes a 'uniform'. This claim is made in the documentary evidence contained in Exhibit 1[16] and was also made during the hearing. In assessing this claim, the Tribunal is guided by Hill J's judgment in the Mansfield's case and by the cases that underpin TR 97/12 as well as TD 1999/62. The Tribunal otherwise notes that, as public rulings that bind the Respondent, TR 97/12 and TD 1999/62 constitute the Respondent's opinion of what is the applicable law on this issue. The Tribunal does not therefore elevate the status of these rulings beyond an expression of the Respondent's views.
6. In Mansfield's case, Hill J stated that:

'A uniform is not merely a set of clothes reserved for the occasion of work. Rather it is the fact that the uniform has a distinctive characteristic which provides the nexus between the expenditure on the uniform and the work activity, notwithstanding that the uniform may be worn travelling to work and in circumstances where clearly modesty, if not necessarily warmth in a country such as Australia, requires the clothing to be worn...'[17]

That the employer has imposed the wearing of the relevant clothes as a compulsory obligation for employees does not in and of itself render those clothes to be a uniform and their cost a deductible expense.[18]According to the Respondent's opinion as expressed in TR 97/12:

'[t]o constitute a distinctive uniform it is not enough that there is a requirement to wear clothing of a particular colour or style at work. The uniform needs to be sufficiently distinctive so that the casual observer can clearly identify the employee as working for the particular employer, or identify the products and services provided by the employer. A uniform is a collection of inter-related items of clothing and accessories that is distinctive to a particular organisation.'[19]

1. In addition, as regards the question of whether clothing constitutes a compulsory corporate uniform/wardrobe, the Respondent's opinion, as expressed in TD 1999/62, is that it 'is a question of fact and impression that can only be determined on a case by case basis in the light of all the circumstances.'[20]Based in part on Case R55 84 ATC 411 at 416-419, this ruling suggests a number of criteria should be considered in making this determination and that failure to satisfy one or more of those criteria does not necessarily mean the clothing is not a compulsory corporate uniform/wardrobe.[21] At the same time, this ruling also specifies that 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. It must also be unique, distinctive and peculiar to the particular organisation, with a timeless quality unaffected by short term changes in fashion.[22]
2. Based on the cases referred to at [36] and [37] above, the Tribunal does not accept the claim made by the applicant, that the branded clothing she is obliged to wear at work constitutes a uniform, on a number of grounds. The clothing is not sufficiently unique, distinctive and peculiar to the organisation the applicant works for. Given the applicant's own acknowledgement that '[o]ur fashion brands deliver seasonal collections with a focus on regular 'newness', and therefore the branded garments that I wear must be current season to demonstrate accurate trends, and to reflect the new season merchandise that is on sale in both our retail and online stores for each brand' (see [28] above), the relevant clothing claimed to be a uniform evidently does not have a timeless quality unaffected by short term changes in fashion. Whilst the Tribunal acknowledges that the relevant clothing is designed to enhance the public image of the applicant's employer and acts as a form of indirect advertising, the applicant has not shown that there exists a general understanding among affected employees within her employer's organisation that the relevant clothing is only to be worn while on official duty, including travel to and from work. The applicant has also not shown that the fabric of the relevant clothing has some distinguishing feature either woven, printed or embroidered into it or that the style, colours or shades of that clothing are subject to limitation. The relevant clothing does not have any logos, initials or insignias that readily and specifically identify PVH Brands Australia (as distinct from the brands that it promotes). Accordingly, the Tribunal finds the relevant clothing to be essentially conventional and not a uniform.
3. On this point, the Tribunal is also not convinced by the applicant's submission[23] that '[t]he clothing is both distinctive and unique, being clearly and overtly branded'. The Tribunal finds that mere branding of the clothing is not sufficient, in and of itself, to establish distinctiveness and uniqueness such as to render that clothing a uniform. Moreover, the Tribunal notes that the applicant's representative has conceded that the applicant's 'uniform expenses are outside the normal requirements for a uniform'.[24]
4. Finally, given the representative's acknowledgement during the hearing that the clothing could be worn by the applicant in non-work time on the weekends (when suggesting a five seventh's apportionment of the clothing expense), the Tribunal finds that the clothing is not used solely for work and also finds that the clothing is not unsuitable for any activity other than work.[25] Further, the Tribunal does not accept the applicant's claim[26] that her role as Brand Ambassador constitutes a 'special circumstance' on par with those special circumstances applying to the flight attendant considered by Hill J in the Mansfield case (discussed further at [49] below).

Relevant Statutory Provision and Legal Principles

1. In assessing whether the applicant has proved, on the basis of the facts found by the Tribunal to apply as noted at [22] to [40] above, that the D3 work related clothing expenses that she has claimed as a deduction satisfy the required nexus to the derivation of the applicant's income, the relevant statutory provision to be applied is section 8-1(1)(a) of the ITAA1997. This section provides that:

'[y]ou can deduct from your assessable income any loss or outgoing to the extent that it is incurred in gaining or producing your assessable income.'

1. A number of court decisions set out the broad legal principles to be considered when assessing whether a particular expense satisfies the test in section 8-1(1)(a).[27]Those principles are that the relevant expense must have the essential character of an outgoing incurred in gaining assessable income or, in other words, of an income-producing expense;[28]there must be a nexus between the outgoing and the assessable income so that the outgoing is incidental and relevant to the gaining of assessable income;[29]and it is necessary to determine the connection between the particular outgoing and the operations or activities by which the taxpayer most directly gains or produces his or her assessable income.[30]It is not sufficient that the expenditure is a prerequisite to the derivation of assessable income. The expenditure must be relevant and incidental to the actual activities which gain assessable income.[31]The fact that the expense is incurred at the employer's direction does not convert the essential character of that expenditure from a private to a work related expense.[32]Also, it is not sufficient that the taxpayer will not be able to engage in the activity from which his/her income is derived unless the expenditure is incurred.[33]
2. In its application of the broad legal principles noted at [42] above to the facts found by the Tribunal at [22] to [40] above, the Tribunal has also been guided by certain court and tribunal decisions that have focused on the deductibility of conventional clothing expenses, specifically in fact scenarios that are similar to the scenario under consideration in this case. Re Taxpayer and FCT[34] concerned a taxpayer who was the CEO and a director of a company which she owned in partnership with her former husband. She had no written employment contract and there was nothing in the terms and conditions of her employment which required her to wear any specific type of clothing. The taxpayer considered that, as she was the 'image of the company', she should spend more on conventional clothes than would otherwise have been the case. The taxpayer was required to make presentations at conferences and seminars and other functions which were attended by the company's consultants and distributors, both in Australia and overseas. She changed her conventional clothes at these seminars and conferences several times a day 'in order to present the necessary image to the consultants and distributors'. The taxpayer claimed a tax deduction for the abnormal related clothing expenses which was disallowed by the Commissioner.
3. Senior Member A Sweidan held[35]that the taxpayer's expenditure on clothes did not form part of her income producing activities. The same can said for the applicant's expenditure on clothes in this case. The Tribunal has found that the applicant's income producing activities are those noted at [25] above. The operations or activities by which the applicant most directly gains or produces her assessable income concern the facilitation and delivery of L&D programs for her employer. Her income producing activities do not include the wearing of clothes, however important it may be that the wearing of suitable (even branded) clothes is observed in the course of her employment. Accordingly, her claimed D3 work related clothing expenses do not have the essential character of income producing expenses and do not satisfy the required nexus to the derivation of the applicant's assessable income so that the expenses are incidental and relevant to the gaining of that assessable income. Merely because the applicant aims to present a certain image and her clothing must be suitable to be worn in her employment is not sufficient to change the character of her expenses from a private nature to an income producing expense.[36]
4. AAT Case 8658 [1993] AATA 124; [1993] 25 ATR 1115 concerned a taxpayer who was a senior fashion editor in a top fashion magazine and who claimed a deduction for conventional clothing expenses. She worked with the fashion director to cover the fashion market and to deal with all new collections of the designers and manufacturers on-site. After seeing all the collections, they would formulate ideas from a local point of view and from an international point of view as to how they would focus on the presentation of clothing for a particular season in their magazine. They would then organize various 'shoots' and choreograph certain photographic situations using these formulated ideas. The taxpayer would also attend regular fashion events, including parades, launches of new products or clothing and social events. At each of these events, the taxpayer considered herself to be representing the magazine. In all situations she would dress to demonstrate her knowledge of the latest fashion and her own sense of style. An important consideration in her mind was that wherever she would go, she went as an ambassador of the magazine. Accordingly, she considered that she had to present an image which was consistent with her employer's leadership in high fashion - a 'leading edge image'. There was no compulsion by her employers or by any of her immediate supervisors to wear any particular type of clothing, although it was personally understood by her that a condition of employment was that she dress in a manner befitting the magazine's image at all times. On the other hand, the taxpayer was not engaged simply because she dressed well. She had skills that distinguished her and which were valuable to the magazine, apart from her ability to project a leading image in the fashion of her attire.
5. Relying on the comprehensive collection of relevant authority in FCT v Cooper [1991] FCA 190; (1991) 29 FCR 177 for guidance, Deputy President McMahon in AAT Case 8658 (at ATR 1121-1122) points out that it is necessary to characterise the expenditure in relation to the gaining of assessable income to determine whether that expenditure is a working expense in the gaining of that income. The correct approach is to consider the way in which the applicant gains her assessable income and to look at the expenditure in relation to that activity. He found that the taxpayer's clothing expenditure could not be essentially characterised as an outlay incurred in gaining her assessable income. Her income producing activities did not include the wearing of clothes, however important it may be that the wearing of suitable clothes is observed in the course of her employment.
6. Given especially the similarity between the taxpayer's fashion ambassadorial role in AAT Case 8658 and the applicant's 'Brand Ambassador' role in this case, the Tribunal finds that on similar grounds, the applicant's D3 work related clothing expense deduction claim does not satisfy the required nexus test under section 8-1(1)(a). Despite her role as a Brand Ambassador, the applicant's clothing expenses cannot be characterised as working expenses in the gaining of the applicant's assessable income. The applicant gains her assessable income by performing the duties and responsibilities noted at [25] above. These concern the facilitation and delivery of L&D programs for her employer. The clothing expenses do not directly relate to the applicant's income earning activities of facilitating and providing such programs for her employer. It is for these activities that the applicant is paid and not for the wearing of clothes, despite the fact that the wearing of clothes is a prerequisite to the conduct of these income earning activities and despite the importance of wearing suitable clothes that convey a particular corporate image, including branded clothes, in the course of conducting these activities.
7. Another fact scenario, similar to the one under consideration in this case, was considered in AAT Case 11,455 [1996] AATA 441; [1996] 34 ATR 1098. That case concerned a taxpayer who was a television newsreader and reporter and who claimed deductions for hairdressing, clothing and jewellery. From the evidence presented to the tribunal in that case, it was apparent that there were no general rules or regulations applied by the taxpayer's employer as to appearance, although the taxpayer had learnt by experience what was suitable for someone's appearing on camera. With respect to the clothing deduction, the tribunal held that all the items of clothing were ordinary articles of apparel and, as the clothing was not to be worn as part of a uniform or in unusual circumstances, the expenditure incurred on the clothing was of a private nature and not deductible.
8. As regards this case's analysis of the required nexus between the clothing expense and the derivation of assessable income, Senior Member Dwyer (taking guidance from Hill J's judgment in the Mansfield Case (31 ATR 367)), pointed out (at 1105) that the flight attendant taxpayer's case was strengthened by the following facts: that she was obliged to wear a uniform by her employer; that the shoes and hosiery in respect of which she claimed a deduction were part of a uniform; that because of the cabin pressure her cabin shoes were required to be half a size too large for ordinary use; and that there was evidence of regular scuffing of cabin shoes because of the nature of the employment duties in the cabin. Given the Tribunal's factual findings at [22] to [40] above, the Tribunal further finds that no such factors apply in favour of the applicant in this case. The applicant is not obliged to wear a uniform by her employer and the clothes in respect of which she has claimed a deduction are not part of a uniform. Further, the circumstances of her employment and the nature of her employment duties do not correspond to special circumstances such as were found to exist by Hill J in the Mansfield Case.
9. Finally, as regards the nexus issue, the Tribunal considers that this case is distinguishable on its facts from Commissioner of Taxation v Edwards [1994] FCA 1051; (1994) 49 FCR 318. According to the finding in that case, whilst generally expenditure on conventional clothing is not deductible, this is not a universal proposition and in special circumstances there may be a sufficient connection between a taxpayer's income earning activities and expenditure on conventional clothing. However, the special circumstances which were found to apply in the Edwards Case, namely, that the taxpayer was obliged to change her clothing two or three times during the day, that she had need of clothes which she would not ordinarily have needed, that she restricted her deduction claim to part of the cost of the additional clothes she needed to acquire in order to dress compatibly with, and discharge her duties to, Lady Campbell, do not apply in this case.
10. Accordingly, for the reasons given at [41] to [50] above, the Tribunal finds that the applicant has not proved that the D3 work related clothing expenses that she has claimed as a deduction satisfy the nexus to the derivation of the applicant's income required under section 8-1(1)(a) of the ITAA1997.

HAS THE APPLICANT PROVED, THAT THE D3 WORK RELATED CLOTHING EXPENSES SHE HAS CLAIMED AS A DEDUCTION, ARE NOT OF A PRIVATE OR DOMESTIC NATURE, AS REQUIRED BY SECTION 8-1(2)(b) OF THE ITAA1997?

'However, you cannot deduct a loss or outgoing under this section to the extent that it is a loss or outgoing of a private or domestic nature'.

This is the exclusory limb relating to private expenditure of section 8-1 and its relation to section 8-1(1)(a) (as one of the positive limbs of section 8-1) was considered by Hill J (in the context of the precursor to section 8-1, i.e. section 51(1) ITAA1936) in Commissioner of Taxation v Cooper [1991] FCA 190; (1991) 29 FCR 177, 196-197. Hill J makes the point that to be deductible, a loss or outgoing must satisfy the tests contained in what are often referred to as the 'positive limbs' of the subsection and be not excluded from deductibility by the exclusory limbs. He also points out that private and domestic expenses are not by their very nature excluded from deductibility as not being outgoings incurred in gaining or producing assessable income (i.e. there is no necessary antipathy between a loss or outgoing incurred in gaining or producing assessable income, and a loss or outgoing of a private nature). Accordingly, it is necessary to first consider, in respect of any loss or outgoing, whether it falls within one or other of the inclusory limbs, and if it does, to then proceed to consider whether the loss or outgoing is of a private nature.

1. Having concluded that the D3 work related clothing expenses which the applicant has claimed as a deduction do not satisfy the relevant positive limb test (section 8-1(1)(a)), it is therefore technically unnecessary, in accordance with Hill J's guidance, to proceed to consider whether these expenses are of a private nature and excluded from deductibility under section 8-1(2)(b). However, for the sake of completeness, and if for any reason the Tribunal's analysis at [41] to [50] above is found to be wrong, the Tribunal proceeds to briefly consider whether these expenses are of a private nature and excluded from deductibility.
2. The relevant facts are those as found by the Tribunal at [22] to [40] above. In Case T47 (1968) 18 TBRD 242, 243; 14 CTBR (NS) 307 Case 56[37], J F McCaffrey (Member) stated the rationale why conventional clothing is usually private in nature as follows: 'In order to live normally in our society, it is requisite that individual members thereof be clothed, whether or not they go out to work. In general, expenditure thereon is properly characterised as a personal or living expense...'.
3. The Tribunal finds that the essential character of the D3 work related clothing expenses which the applicant has claimed as a deduction is private and that there are no circumstances in the present application which would have the effect of altering the generally held perception of those expenses referred to at [54] above.[38] As noted by Senior Member Barbour in AAT Case 9679 (1994) 29 ATR 1077, 1083-4[39], when finding that a professional public speaker and presenter who kept separate 'A list' clothes which she wore only for her presentations, was not entitled to a deduction under section 51(1) for the costs of purchasing those clothes:

'For it was essential that the applicant wear something to her income producing activities, and her A list clothing was essentially a question of choice, however important she perceived it to be to her success or otherwise. Like clothing worn on any occasion, and for any employment, the applicant's clothing needed to be suitable for the purpose of wearing to that presentation, but this does not change its character to a business expense, and I would find that the nature of the expense is essentially private'.

In similar terms, the Tribunal finds that the branded clothing for which the applicant has claimed a deduction was essentially a question of choice, no matter how important she perceived it be to the presentation of a certain corporate image, and whilst her clothing needs to be suitable for the purpose of conducting her income earning activities as part of her employment, this does not change the character of the relevant expenses from a private expense to a working expense.

1. Finally, it was noted at [16] above that the applicant's D3 claim extends to items that are not clothing (such as hairdressing). The Tribunal finds these items to also be of a private nature and not deductible.
2. Accordingly, for the reasons given at [52] to [56], the Tribunal finds that the applicant has not proved that the D3 work related clothing expenses that she has claimed as a deduction are not of a private or domestic nature and therefore these expenses are excluded from deductibility by section 8-1(2)(b) ITAA97.

TO THE EXTENT THAT THE D3 WORK RELATED CLOTHING EXPENSES THE APPLICANT HAS CLAIMED AS A DEDUCTION SERVE A DUAL PURPOSE OR ARE OF A MIXED CHARACTER (I.E. THEY HAVE A NEXUS TO APPLICANT'S DERIVATION OF ASSESSABLE INCOME AS WELL AS HAVING A PRIVATE OR DOMESTIC NATURE), HAS THE APPLICANT PROVED THAT THE CLAIMED DEDUCTION AMOUNTS HAVE BEEN APPORTIONED ON A REASONABLE BASIS, AS REQUIRED BY SECTION 8-1 OF THE ITAA1997?

1. Given the Tribunal's findings above and specifically its finding that the claimed clothing expenses do not have a mixed character but are entirely of a private nature, it is not necessary for the Tribunal to consider and answer this question.

HAS THE APPLICANT PROVED, IN ACCORDANCE WITH THE SUBSTANTIATION REQUIREMENTS OF SUBDIVISION 900-B OF THE ITAA1997, THAT THE D3 WORK RELATED CLOTHING EXPENSES THAT SHE HAS CLAIMED AS A DEDUCTION WERE PROPERLY AND CORRECTLY INCURRED?

1. Given the Tribunal's findings above it is not necessary for the Tribunal to consider and answer this question.

1. The Tribunal affirms the decision under review.

Mr Maxwell Wang, Assistant Litigator, General Litigation, Litigation and Legal Services, Australian Taxation Office

[1] Commissioner of Taxation v Ross [2021] FCA 766 [48].

[2] McCormack v Federal Commissioner of Taxation [1979] HCA 18; (1979) 143 CLR 284, 303 (per Gibbs J).

[3] Mansfield v FCT 31 ATR 367, 375.

[16] See for instance T7-182 which is entitled 'Catherine Rowland Receipts for Uniform and Makeup and Office Supplies' and the use of the letter 'u' to indicate the specific clothing items claimed as 'uniform' at T7-157 and following.

[17] Mansfield v FCT 31 ATR 367, 375.

[23] Made at 73.1 of the applicant's SFIC.

[25] See TR 97/12 [54] relying on Case U95 87 ATC 575 at 580.

[27] These court decisions are referred to in TR 97/12 [46].

[28] Lunney v FCT; Hayley v FCT (1958) 100 CLR 478.

[29] Ronpibon Tin NL v FCT [1949] HCA 15; (1949) 78 CLR 47.

[30] Charles Moore & Co (WA) Pty Ltd v FCT [1956] HCA 77; (1956) 95 CLR 344; FCT v Cooper [1991] FCA 190; (1991) 29 FCR 177; Roads and Traffic Authority of New South Wales v FCT [1993] FCA 445; (1993) 43 FCR 223; and FCT v Hatchett [1971] HCA 47; (1971) 125 CLR 494.

[33] Ibid 184 (per Lockhart J) and 201 (per Hill J).

[34] [2006] AATA 100; [2006] 61 ATR 1192.

[37] As referred to in TR 97/12 [53].

[39] Referred to also in AAT Case 11,455 1108.