Deductibility of sun protection items by a non business taxpayer

Is a non business taxpayer entitled to a deduction under section 40-25 of the Income Tax Assessment Act 1997 ('ITAA 1997') for the cost of purchasing sunglasses and a hat where they are required to work outdoors for extended periods?

Yes. A non business taxpayer is entitled to a deduction under section 40-25 of the ITAA 1997 for the cost of purchasing sunglasses and a hat as the expenditure was incurred in gaining or producing their assessable income.

In order to earn their income the taxpayer is required to be outdoors and exposed to the sun for extended periods.

To protect themselves from the sun they wear sunglasses and a hat.

They purchased these items themselves and was not reimbursed by their employer.

Each item was purchased for less than $300.

Section 40-25 of the ITAA 1997 allows a taxpayer to deduct an amount equal to the decline in value for an income year of a depreciating asset that they held for any time during that year.

A depreciating asset is an asset that has a limited effective life and can be expected to decline in value over the time it is used (subsection 40-30(1) of the ITAA 1997).

Sunglasses and a hat are each a depreciating asset for taxation purposes.

Subsection 40-80(2) of the ITAA 1997 provides that the decline in value of a depreciating asset will be the cost of the asset if the following applies: • the cost of the asset does not exceed $300 • the asset is used predominantly for the production of assessable income (other than from a business) • the asset is not part of a set of assets the total cost of which exceeds $300 • the total cost of the asset together with any substantially identical assets do not exceed $300.

The asset must be used predominantly for earning assessable income.

Following the decision in Morris and Ors v. Federal Commissioner of Taxation [2002] FCA 616; (2002) 50 ATR 104; 2002 ATC 4404 it is accepted that sunglasses and a hat protect the taxpayer from the risk of illness or injury as a result of exposure to the sun's glare therefore enabling the person to earn their assessable income and increase their productivity. There is a clear connection between the expenditure incurred and the earning of assessable income.

The taxpayer is entitled to a deduction for the decline in value which is equal to the cost of the sunglasses and hat under section 40-25 of the ITAA 1997. Apportionment of the expense under subsection 40-25(2) of the ITAA 1997 will be necessary if the sunglasses or hat are used partly for private purposes.