What questions or discussions do I regularly have with ag industry clients?
One that would fall at the top of the list would be related to claiming clothing and uniform expenses against their business or wage income.
Like for all deductions, 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.
However, it must be remembered that 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.
So how as a primary producer does this potentially fit into your business?
A compulsory uniform is clothing that identifies you as an employee of an organisation. 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. This design must also then be on each item of clothing.
For primary producers, the use of protective clothing is common due to the risks faced in the work environment. To be considered under the protective clothing classification, the clothing must have protective features and functions, and must provide a sufficient degree of protection against specific risks you are exposed to in carrying out your work. Examples of protective clothing include fire-resistant clothing, sun-protection clothing with a UPF sun protection rating, safety-coloured vests, sunglasses, hats and steel-capped boots.
For most primary producers, jeans are a common item of clothing, but are not deductible unless they have the registered design on them. This would also apply to drill shorts and shirts unless they too have special features such as a heavy weave providing a UV rating or additional heavy duty fabric which protects the wearer from risk of injury or illness.
To ensure you are receiving your eligible deductions investigate your options on uniform and protective clothing and contact your accountant to see which works best for your business.
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