Deductibility of sunglasses by an employee driver

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 where they are exposed to the sun while driving a vehicle for extended periods for work purposes.

Yes. The taxpayer is entitled to a deduction (to the extent that the sunglasses were not used for private purposes) under section 40-25 of the ITAA 1997 as they were incurred in gaining or producing assessable income.

The taxpayer earns their assessable income as an employee driver.

While performing their work duties the taxpayer is exposed to the sun.

To protect themselves from glare and ultra violet radiation they wear sunglasses.

The sunglasses improve visibility which reduces their exposure to personal danger from road accidents.

By reducing eyestrain, the sunglasses allow them to drive for longer periods of time thereby increasing their productivity.

The taxpayer purchased the sunglasses and was not reimbursed by their employer. The cost of the sunglasses did not exceed $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 are 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; and • the total cost of the asset together with any substantially identical assets does 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 protect the taxpayer from the risk of illness or injury as a result of exposure to the sun's glare therefore enabling the taxpayer 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 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 are used partly for private purposes.