Can the cost of clothing be tax deductible?

Sometimes it can be, but only in limited circumstances.

The tax deductibility of expenditure on clothing is subject to strict ATO guidelines. These cover occupation-specific clothing, compulsory or registered non-compulsory uniforms and protective items.

Conventional clothing

What you can’t claim is the cost of conventional clothing, even where your employer expects you to observe a particular dress style. You might work in an office environment, and your employer expects you to wear a business suit to work, even though you wouldn’t have even bought the suit but for your employer’s dress requirements. While the cost of the suit might seem like a work related expense, it is not deductible as it is conventional clothing that could also be worn outside of work. This makes it a private expense, even though it relates directly to your employment.

Conventional clothing includes business attire, non-monogrammed black trousers and white shirts worn by wait staff, non-protective jeans and drill shirts worn by tradies and athletic clothes and shoes worn by PE teachers.

Occupation-specific clothing

On the other hand, occupation-specific clothing falls on the deductible side of the line, for example a chef’s distinctive chequered pants or a health worker’s blue uniform, including nurses’ stockings and non-slip shoes.

Compulsory uniforms

The cost of clothing that forms part of a compulsory uniform is generally deductible. A compulsory uniform is a set of clothing that identifies you as an employee of a particular organisation. Your employer must make it compulsory to wear the uniform and have a strictly enforced workplace policy in place.

You can only claim a deduction for shoes, socks and stockings if:

They are an essential part of a distinctive compulsory uniform, and
The characteristics (the colour, style and type) are an integral and distinctive part of your uniform that your employer specifies in the uniform policy, for example, airline cabin crew members.

You can claim for a single item of clothing such as a jumper if it's distinctive and compulsory for you to wear it at work. An item of clothing is unique and distinctive if it:

Has been designed and made only for the employer, and
Has the employer's logo permanently attached and is not available to the public.

Just wearing a jumper of a particular colour is not part of a compulsory uniform, even if your employer requires you to wear it, or you pin a badge to it.

Non-compulsory uniforms

You can only claim for non-compulsory work uniforms if your employer has registered the design with AusIndustry. This means the uniform has to be on the Register of Approved Occupational Clothing. Your employer will be able to clarify whether your uniform is registered.

Protective clothing

The cost of protective clothing is deductible, and covers such items as:

Fire-resistant clothing
Sun protection clothing with a UPF sun protection rating
Hi-viz vests
Non-slip nurse’s shoes
Protective boots, such as steel-capped boots or rubber boots for concreters
Gloves and heavy-duty shirts and trousers
Occupational heavy duty wet-weather gear
Boiler suits, overalls, smocks or aprons you wear to avoid damaging or soiling your ordinary clothes during your work activities.

Laundry and dry-cleaning costs and repairs

You are entitled to a deduction for the cost of cleaning your deductible clothing. If you launder them at home, the Tax Office will allow you a deduction of $1 per load where the load contains only deductible clothing, or 50 cents per load where deductible clothing is mixed with other items.

You are entitled to claim the cost of dry-cleaning deductible clothing, as well as the cost of mending and repairs.

Record keeping

You should keep receipts or other documentary evidence of your expenditure on buying, laundering or repairing deductible work clothing. Proof of laundering clothing at home can be in the form of diary entries.

Allowances

If your employer pays you a clothing allowance, this needs to be included in your assessable income, and you can only claim what you have actually spent.

Feel free to come and see us for advice as to whether your expenditure on work clothing is deductible.

< Older Post

Division 296 Tax Revisited

By Brad Dickfos • December 1, 2025

Big news for anyone with a large super balance – the government has gone back to the drawing board on the controversial Division 296 tax , and the changes are a big step toward fairness and common sense. A quick recap When the Division 296 tax was first announced in 2023, it caused an uproar. The main problem? It would have taxed unrealised gains, that is, paper profits you haven’t actually made yet and set a $3 million threshold that wasn’t indexed meaning it wouldn’t rise with inflation. After a wave of feedback from the industry, the government has listened. The Treasurer’s new announcement, made in October 2025, fixes some of the biggest issues. The revamped version is designed to be fairer, simpler, and more in line with how tax usually works. The plan is to start the new system from 1 July 2026, with the first tax bills expected in 2027–28. What’s changing Here’s what’s new under the revised Division 296 tax: · Only real earnings will be taxed. No more tax on unrealised gains as you’ll only pay on earnings you’ve actually made. · Super funds will work out members’ real earnings and report this to the ATO. · The $3 million threshold will be indexed to inflation in $150,000 increments, keeping pace with rising costs. · A new $10 million threshold will be introduced. Earnings above that will be taxed at a higher rate of 40%, and that threshold will also rise with inflation. · The start date is pushed back to 1 July 2026, giving everyone more time to prepare. · Defined benefit pensions are included, so all types of super funds are treated the same. So what does this mean in practice? Think of it as a tiered tax system: · Up to $3 million – normal super tax of 15%. · Between $3 million and $10 million – taxed at 30%. · Over $10 million – taxed at 40%. Basically, the more you have in super, the higher the tax rate on your earnings above those thresholds. How it will work Super funds will continue reporting members’ balances to the ATO, which will figure out who’s over the $3 million mark. If you are, your fund will tell the ATO your actual earnings (not paper gains). The ATO will then calculate how much extra tax you owe. We don’t yet have the fine print on what exactly counts as “realised earnings,” but it’s likely to mean profits you’ve actually made, similar to how taxable income is treated now. What’s still up in the air While these updates make the system much fairer, there are still a few unanswered questions: · What exactly counts as “earnings”? Will it only include profits made after 1 July 2026, or could older gains that are sold later be included too? · What happens with capital gains? Super funds usually get a one-third discount on capital gains for assets held over a year, but it’s unclear whether that will still apply. · How will pension-phase income be handled? Some super income is tax-free when you’re in the pension phase, and we don’t yet know how that will interact with the new rules. · Can people with over $10 million move money out? If your earnings above $10 million are taxed at 40%, you might want to shift funds elsewhere but the government hasn’t said if that’ll be allowed. What it means for you If your super balance is over $10 million, the proposed rules mean that a portion of your superannuation earnings could attract a higher tax rate of up to 40%. For people with between $3 million and $10 million, the new system could also change how much tax applies to their super earnings, depending on how the final legislation defines “realised gains.” But don’t rush. These rules aren’t law yet, and if you take your super out, it’s hard to put it back because of contribution limits. It’s best to wait for the final legislation and get professional advice before making any decision to withdraw benefits from super.

Christmas and Tax

By Brad Dickfos • November 18, 2025

( ) Knowing the rules around Fringe Benefits Tax (FBT), GST credits and what is or isn’t tax deductible can help keep tax costs to a minimum. Holiday celebrations generally take the form of Christmas parties and/or gift giving. (<->)

Reducing your tax bill while topping up your super

By Brad Dickfos • November 11, 2025

Let’s say you’ve just sold the house you inherited from your parents 12 years ago for $1.3 million. You’ve been renting it out for most of that time, but the property market has been hotting up, and you were told by several real estate agents that they could get you a good price. But what about the tax consequences? At age 50, you’re still working (salary of $120,000 per annum), having returned to the workforce in July 2023 following a five-year absence for personal reasons. You don’t expect to retire from paid employment until age 65 at the earliest. Your total super balance on 30 June 2025 was $300,000, sitting in a retail fund. Your accountant has calculated the net capital gain on selling Mum’s house as $600,000. After applying the 50% CGT discount, this results in a taxable income of $420,000, and a whopping tax bill of $163,538 to go with it. Can anything be done? Depending on your superannuation history, there may be a legitimate way of taking a big chunk out of that tax bill while topping up your super at the same time. Concessional super contributions are subject to an annual cap, which is set at $30,000 for the 2025-26 income year. That figure is well above the mandatory employer super guarantee amount for most income levels. Many people don’t go close to using up their concessional contribution caps, which can leave them with carry-forward concessional contributions. To help people with modest total super balances (below $500,000 on the previous 30 June), the government gives them the option of using some or all of their previously unused concessional contributions cap on a rolling basis for five years – ie, the five previous income years from 2020-21 to 2024-25, plus the current year (2025-26). Conveniently, the ATO keeps track of your carry-forward concessional contributions balance, which you can look up on myGov. The beauty of this arrangement is that you can use your catch-up concessional contributions to make personal deductible contributions, which can offset part of the CGT gain from the sale of the inherited property. Instead of being taxed at the top marginal rate of 47%, the amount of the catch-up contribution is taxed at the normal rate of 15% in your super fund, which creates a net saving of 32% on the contributed amount. It is not unusual for someone to have carry-forward concessional contributions in excess of $100,000, which would take your taxable income down to $320,000, with tax payable of $116,538, or $47,000 less than what your tax bill would be without making the tax-deductible catch-up contribution. That tax saving has to be reduced by $15,000 in contributions tax payable by your super fund, for a net saving of $32,000. Remember, however, that any super contributions you make at age 50 will not be accessible until you reach preservation age (60 if retired or 65 if you’re still working). If you have other plans for that $100,000 (and you did pocket $1.3 million on the house sale) you will need to weigh up your options. But locking up a small part of the house proceeds seems like a small price to pay for a $32,000 tax saving. On the other hand, if you have an appetite for putting even more money into your super, you might want to consider also making a non-concessional contribution of up to $360,000. This is not tax deductible and there is no 15% contributions tax when paid into your fund. That covers the tax side of things but since you have received a life-changing windfall, you should consider getting advice from a licensed financial adviser. If you find yourself in this situation, come in and see us well before 30 June 2026. If you decide to go ahead with making a catch-up contribution the super fund has to be notified, which we can help you with.