Claiming clothes as a business expense

aqua60sbootYou’re not in Australia now, Doctor Ropata.  That’s what we jokingly say to clients who’re trying to claim things like socks, shoes and stockings (because Australia’s rules are much kinder than ours when it comes to getting tax back on work clothing).  In New Zealand, if you want to claim work clothing make sure it’s:

  1. A Uniform
  2. Advertises your business
  3. For health & safety (high vis vests, waterproof pants, hair nets etc)
  4. Protective (steel capped boots, protective eye wear, helmets, steel gloves, masks, overalls, surgical scrubs, hard hats etc)
  5. Normal clothing given to employees (or a clothing allowance) which you’ve paid Fringe Benefit Tax or PAYE on.

Sorry, no other work clothing is tax deductible and it really doesn’t matter how logical your argument is because Tax Law doesn’t care about logic (or what your friends say).  It’s about legislation and you’ll generally find that someone else has already fought and failed with your argument in Court or with the IRD.  Want some real life examples?  How about the personal trainer given home detention for claiming workout clothing and even poor old plain-Clothes Police Officers were taxed on their clothing allowances.

So to keep you safe here’s a few things it’s not worth trying to claim:

  • Glasses.  It really doesn’t matter that you can’t do your job without them. Guide dogs aren’t tax deductible either.
  • Haircuts.  Yes, I know you need to look a certain way to earn money but employees can’t claim haircuts either.
  • Business suits, shoes & socks. No, not even when they’re for a Job Interview or clothes for an Audition.
  • Makeup.   Unless you’re in the beauty business, the IRD sees this as a personal expense. Actors and Models supplying their own makeup should be reimbursed by the production company or given a Per Diem which means there’s no tax to pay and no tax to claim either.
  • Dry Cleaning work clothing is only deductible if it’s for uniforms or perhaps one of those awkward moments when you’ve ‘accidentally’ spilt something hot and hasty on your clients pants.
  • Skijackets.  We all need to keep warm; that’s the whole point of clothing so if you really want to claim your Ski-Jacket make sure it’s got your company contact details printed on it loud and proud.

How good will that $700 jacket look whizzing down the slopes with ‘Elroys-Veterinarian-Clinic’ emblazoned across it?


Copyright © 2012 Boutique Limited T/A Boutique Financial Chartered Accountants Auckland All Rights Reserved.    This publication must be read in accordance with the attached disclaimer.