Deductibility of business clothing expenses

By Doug Carroll | May 17, 2013, 7:14 p.m.

At issue
It would perhaps be more apt to entitle this article “non-” deductibility of business clothing expenses, as fairly narrow qualification rules apply to such claims. Particularly in the circumstance of an independent financial advisor, a successful claim may be a remote possibility
Still, it is not entirely outside the realm of possibility, and it can be instructive for one’s future reference to have an appreciation of the nature of claims that fail to qualify.

With fingers crossed then, here are some taxpayers who sought to deduct clothing costs, including one that got a little more exposure than may have been desired.

Rupprecht v. The Queen, 2007 TCC 191

Advisor had expended considerable cost building and furnishing an office in the Vancouver suburb of Langley. He testified that he needed suitable clothing to go with the office, claiming over $8,400 through the 1999 and 2000 taxation years for purchases from “Ermengildo Zegna, an exclusive men’s wear shop,” as described by the judge. In support of his position, the advisor even included a letter from a store sales associate.

As the clothing did not fall under claims for uniforms and such, its deductibility would need to rest on being a general business expense, which in turn required the judge to consider the converse condition of what constitutes a personal expense. In denying the claim, the judge held that “expenses relating to one’s personal appearance are the very essence of a personal expense” for which the cost is not deductible.

Rioux v. The Queen, 2007 TCC 82

Advisor sought to deduct just over $2,000 for clothing expenses in each of the 2001 and 2002 taxation years. The claims were based in part on advisor’s argument that he was self-employed, despite his commissions being characterized as employment income on his T4 slip from Canaccord Capital Corporation, and he having likewise disclosed those commissions as employment income in reporting his income in those years.

On appeal, the advisor produced an agreement from 1994 purporting to show a self-employment relationship with the predecessor company that was acquired by Canaccord in 1999. The advisor alleged that Canaccord was bound by the former agreement, but provided no proof of this assertion, and therefore he failed to satisfy the threshold requirement of being self-employed for the judge to even consider the purported deduction.

Hamper v. Commissioner of Internal Revenue (United States Tax Court Summary Opinion 2011-17)

While lacking precedent value in Canada, cases from other jurisdictions can be illuminating.

In what has infamously become known as the ‘thong deduction’ case, an Ohio television anchorwoman sought to claim various items of clothing allegedly necessary to perform her job duties. In deciding whether an item should be claimed as a deductible business expense, she asked herself “would I be buying this if I didn’t have to wear this” to work? She answered “no”, but the judge decided it was “yes”. No deduction.

Practice points
1- The cost of uniforms and other clothing consumed in the workplace may be deductible.