Tax Deductible Clothing

As an accountant in New Zealand, one of the common questions I encounter is about clothing expenses and what can be claimed for tax purposes. Understanding the distinction between business and personal clothing can help ensure you're making the most of your deductions without crossing any lines. Here’s a quick guide to help you navigate this area effectively.

Wouldn’t it be nice if all “work clothes” could be claimed in our business!

Sadly this isn’t something allowed by the Inland Revenue.

1. Business-Related Clothing: What’s Deductible?

In New Zealand, the tax rules are quite specific when it comes to clothing deductions. To qualify for a deduction, the clothing needs to serve a distinct business purpose. Here are the key categories:

• Health and Safety Gear: If your clothing is essential for health and safety reasons, such as protective clothing, uniforms, or gear needed to comply with workplace safety regulations, these items are tax-deductible. For instance, if you’re in a role where you require safety boots, gloves, or high-visibility vests, you can claim these as business expenses.

• Branded Clothing: Clothing that is branded with your company’s logo and used specifically for business purposes can also be deductible. This includes items like branded polo shirts, jackets, or hats that are worn during business activities or promotional events.

2. Personal Clothing: What’s Not Deductible?

The general rule is that clothing worn primarily for personal use, even if worn at work, is not deductible. This includes:

• Everyday Wear: Standard business attire like suits, blouses, or trousers that you wear to the office or client meetings, but which aren’t specific to your job role or business branding, cannot be claimed. These items are considered personal clothing and don’t meet the criteria for a tax deduction.

• Fashionable Items: Even if you buy a trendy outfit with the intention of looking professional, unless it’s specifically required as part of a uniform or branded with your company’s logo, it falls under personal clothing and is not deductible.

Still unsure on what category your purchase falls in? Feel free to get in touch for specific advice.